Cross-Straits Economic Cooperation Framework Agreement, Cross-Strait Agreement on Intellectual Property Right Protection and Cooperation, and implications of one-China.

Author:Chen, Ping-Hsun
  1. INTRODUCTION II. TRIPS AND FTA A. Overview B. IP Issues in FTA Negotiations C. Taiwan's Approach D. China's Approach III. CHINA AND ITS CEPAs WITH HONG KONG AND MACAU. A. Overview B. Supplements to the Hong Kong CEPA C. Supplements to the Macau CEPA D. Comments IV. ECFA WITHOUT IP-RELATED PROVISIONS: IMPLEMENTATION OF THE "ONE CHINA" PRINCIPLES A. "One-China" Prerequisite B. Role of a Separate IP Agreement V. AFTERMATH OF THE ECFA VI. CONCLUSION I. INTRODUCTION

    China continues to consider Taiwan as its territory. (1) In recent years, China has made many efforts to incorporate Taiwan into its economic system. (2) The traditional approach was to attract Taiwanese companies to set-up manufacturing facilities in China. (3) The new approach characterizes the Chinese market as Taiwan's most promising export market. (4) In 2010, China finally had a chance to include Taiwan into a central government-to-local government scenario. (5)

    On June 29, 2010, Taiwan and China entered into an "agreement" named "Cross-Straits Economic Cooperation Framework Agreement" ([TEXT NOT REPRODUCIBLE IN ASCII], liang an ring ji he zuo jia gou xie yi, in Mandarin Chinese; hereinafter, ECFA) (6) which then was ratified by the Legislative Yuan (Taiwanese congress) on August 17, 2010. (7) The ECFA was designed, according to the Ma Ying-Jeou Administration, to facilitate stronger economic cooperation between the two states. (8) Particularly, the ECFA was expected by the same administration to make Taiwan a gateway for foreign companies to enter the Chinese market. (9)

    During the making of the ECFA, another agreement was being negotiated by the two countries. (10) This unique agreement was specifically about the affairs of intellectual property protection (11) and is called "Cross-Strait Agreement on Intellectual Property Right Protection and Cooperation" ([TEXT NOT REPRODUCIBLE IN ASCII], hai xia liang an zhi hui cai chan quan bao hu he zuo xie yi, in Mandarin Chinese; hereinafter, Taiwan-China IP Agreement). (12) The Taiwan-China IP Agreement and ECFA were signed on the same day. (13)

    Some commentators try to characterize the ECFA as a free trade agreement (FTA). (14) However, the ECFA is not a FTA because of its two distinctive features. First, the signatory representatives are not government agencies responsible for economic affairs. (15) The Taiwanese signatory is the Strait Exchange Foundation ([TEXT NOT REPRODUCIBLE IN ASCII], hai xia jiao liu ji fin hui, in Mandarin), while the Chinese signatory is the Association for Relations across the Taiwan Straits ([TEXT NOT REPRODUCIBLE IN ASCII], hai xia liang an ring mao jiao liu xie hui, in Mandarin Chinese), a special association created by the Chinese Government to deal with Taiwan affairs to avoid recognizing Taiwan's statehood. (16) The formation of the ECFA was managed by this Chinese special association. (17) On the other hand, China's FTAs are managed by the Ministry of Commerce. (18) The signature of each FTA is the Government of the People's Republic of China. (19) Hence, the ECFA is very different from China's regular FTA practice, which shows that China intended to treat the ECFA as a non-FTA agreement.

    Second, the ECFA does not have IP-related provisions. (20) The independency of the Taiwan-China IP Agreement from the ECFA further demonstrates that the ECFA is not a FTA. (21) The general practice of forming a FTA includes IP clauses in an agreement. (22) For example, the United States always raises IP issues in negotiating FTAs with other countries and provides clauses in its model FTA. (23) Even China, as this Article discusses, has included IP clauses in its FTAs. (24) Therefore, China must have reasons for structuring the ECFA without IP clauses.

    This Article particularly explores the second distinctive feature of the ECFA, a lack of IP-related provisions, and is intended to address what Taiwan has lost through the ECFA. That is, Taiwan has created an impression that it has conceded that it is part of China. (25) This observation is based on the distinctive feature of the formation of the ECFA, as well as the contextual structures of the ECFA and Taiwan-China IP Agreement.

    This Article has four parts. Part II discusses the background of FTA negotiations and IP-related issues thereof. Part II also examines Taiwan's FTA negotiations to figure out how Taiwan frames IP-related provisions in its FTAs, and reviews China's FTAs to find out how China approaches IP-related issues in its FTA negotiations. Part III specifically analyzes the FTA-like "arrangements" that China entered into with its two special administrative regions, Hong Kong and Macau. The purpose is to find out how IP-related issues are handled when China faces its local governments. Part IV attempts to explain why the ECFA has no IP-related provisions and how the Taiwan-China IP Agreement works within this framework. This part is intended to explore how China constructed a legal framework to implement its ideology of "One China." Finally, Part V briefly discusses the aftermath of the EFCA and echoes the intention of this Article.


    1. Overview

      The General Agreement on Tariffs and Trade (GATT) establishes two basic principles for international trade law: national treatment and most-favored-nation (MFN). (26) "National treatment" expresses a nondiscrimination principle applied within the border of a member. (27) The principle requires a member to treat like products, either made in this nation or imported from another member, equally with respect to laws and regulations. (28) On the other hand, MFN focuses on the nondiscrimination principle applied at the border. (29) MFN requires a member to treat like products imported from all other members equally. (30)

      FTAs are considered as a bypass of the principles of MFN. (31) Two WTO members can use a bilateral agreement to treat each other better than other members outside the bilateral agreement. (32) This practice is governed by GATT Article XXIV, which allows WTO members to form a free trade agreement. (33) Article XXIV establishes two main conditions as prerequisites of FTAs. (34) Article XXIV.5 provides an external requirement, while Article XXIV.8 provides an internal requirement. (35) The external requirement forecloses that FTA participants can raise more tariffs or impose higher regulatory duties than what they had promised before entering into the WTO. (36) On the other hand, the internal requirement imposes that the elimination of tariffs or regulatory duties has to apply to "substantially all the trade between" the FTA parties. (37) The internal requirement also sets a ten-year timeframe for the FTA parties to reduce tariffs down to zero. (38)

      In addition, FTAs may have different names, such as economic partnership agreements (EPAs), closer economic partnership agreement (CEPAs), new-age economic partnership agreement (NEPAs), and comprehensive economic cooperation agreement (CECAs). (39)

    2. IP Issues in FTA Negotiations

      During the formation of the WTO, the participating countries negotiated an international IP agreement, which later became an Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) in 1994 at the end of the Uruguay Round of negotiations on the GATT. (40) The need for this new IP treaty resulted from the lack of enforcement clauses in traditional IP treaties, such as the Paris Convention and Berne Convention. (41)

      The TRIPS set a minimum standard requiring members to implement national IP protection, (42) and any country which wants to join the WTO has to accept the TRIPS and implement the TRIPS provisions into its domestic law. (43) Today, the WTO has 153 members, meaning that the TRIPS have become an international standard for IP protection. (44)

      However, the TRIPS is not a perfect standard for developed countries because the TRIPS was made by balancing the competing interests of developed and developing countries with the latter countries' main concern that the IP protection may only benefit foreign investors. (45) Moving from multilateralism, some developed countries have adopted bilateralism as one approach to implement their IP legal traditions into another country's legal system. (46) Consequently, FTA negotiations have become a tool for exceeding the TRIPS standard. (47) This practice is so-called "TRIPS-plus" bilateral agreements. (48)

      Up to now, TRIPS-plus provisions have commonly appeared in Asian-Pacific FTAs. (49) This phenomenon began after the TRIPS was effective. (50) While developed countries always include IP issues in their FTA negotiations, (51) developing countries also have interests in IP because they have to protect traditional knowledge or generic resources. (52) Thus, it is reasonable to conclude that IP issues are part of FTA negotiations for most countries.

      If the ECFA is a FTA, then the negotiation of the ECFA is certainly a rare case in the Asian-Pacific FTA practice because the finalization of the ECFA does not cover IP clauses. To answer whether the ECFA is a rare case, it is necessary to examine the FTA practices of both Taiwan and China.

    3. Taiwan's Approach

      1. Overview

        Under China's diplomatic strategy to isolate Taiwan from the international community, Taiwan rarely acts as a sovereign state building up relationships with other countries.53 Until now, Taiwan has entered into four FTAs with five countries in Latin America. (54) This great achievement was made by the Chen Shui-bian Administration. (55)

        On August 21, 2003, the Free Trade Agreement between the Republic of China and the Republic of Panama (hereinafter, "Taiwan-Panama FTA") was signed. (56) It was effective on January 1, 2004. (57)

        On September 22, 2005, the Free Trade Agreement between the Republic of China (Taiwan) and the Republic of Guatemala (hereinafter, "Taiwan-Guatemala FTA") was signed. (58) The effective date was July 1, 2006. (59)

        On June 16, 2006, the Free Trade Agreement between the Republic of...

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