Both the EU and US use coercive mechanisms to pursue their interests on IPRs globally. Every year the United States Trade Representative (USTR) releases a Special 301 Report, which identifies countries with a level of IPR protection deemed insufficient or inadequate. The reports use a tiered system: Priority Foreign Countries and the Priority Watch List are the most severe; Watch List countries are less severe. Countries risk trade sanctions if they fail to address problems relating to their protection of IPRs.
The EU created a similar mechanism. The EU reports can lead to binding and enforceable decisions, which can be used to pursue sanctions against third parties. Under the EU mechanism, as with Special 301s, there is a clear path from priority-country status to sanctions.
The EU and US unilateral mechanisms have largely targeted the same countries in the Asia-Pacific region. In the past 15 years, China has been the main target of both the US and the EU mechanisms, followed by Indonesia and Thailand. One difference between the EU and US is the Philippines, which was listed as a priority two country for the EU, but does not appear on recent US Priority Watch Lists.
The US has been more assertive than the EU when using coercion against China. While both the EU and US have primarily targeted China with their coercion, only the US has actually imposed trade sanctions. IPRs were one of the main reasons for the Trump Administration’s 301 investigation, which was launched in August 2018 and led to tariffs being imposed on US$365.3 billion worth of imports from China. In contrast, the EU did not increase its tariffs on Chinese goods. Nevertheless, the EU has identified China as a “systemic rival” to Europe and condemned China’s “unfair” trade policies and “lack of reciprocal market access”.
Replication is duplication
Despite notable exceptions, the EU and US have largely replicated each other’s efforts. They target a similar cohort of countries and focus on a similar set of IPR issues. Their initiatives in the Asia Pacific are not coordinated to serve their shared interests, nor do they undermine the work of either party. There is, therefore, no apparent regulatory competition or coordination via a division of labor. Instead, the EU and US generally replicated each other’s work.
Replication can be more accurately described as the EU duplicating the US’s international IPR initiatives. The EU’s IPR reports reflect the US’s Special 301 Reports, which were introduced in the 1980s. The EU developed its more aggressive TRIPS-plus trade strategy after the US’s spate of TRIPS-plus agreements in the early 2000s. The EU’s imitation of (or learning from) the US has generated redundancies, however. This begs the question: Why does the EU duplicate US efforts in the first place?
As a result of the most-favored-nation principle, concessions made by Asian countries to the US are automatically extended to the EU so there is little need for EU instruments to reaffirm them. Moreover, if US trade pressure failed to extract concessions from Asian countries, there is little reason to believe that the EU would be more successful. Replication has the potential to act as a de facto form of coordination if the EU and US reinforce each other’s efforts. However, there is little evidence to suggest that the combined US and EU efforts are more successful than when they exert pressure individually.
Understanding why the EU is following the US is a subject for future research. One potential explanation could be linked to the EU’s domestic political economy: European leaders might duplicate US strategies to signal to their IPR-dependent constituents that they care about their interests. Another explanation could be that bureaucrats and negotiators reinforce their professional identity and reduce political risks by sticking to established norms and procedures. Or perhaps the EU’s strategic objective is to increase the number of forums to negotiate rules and adjudicate disputes with a view to creating opportunities for forum-shopping strategies (efforts to find a setting which would be more likely result in a favorable outcome).
Implications for Asian countries
The US and EU’s replication of each other’s strategies raises important policy implications for Asia-Pacific countries. When Asian governments negotiate IPR with the US or the EU, they should be aware that making concessions to one is unlikely to reduce pressure from the other, even though bilateral concessions benefit IPR holders globally. Moreover, by engaging bilaterally with the US and the EU, Asian countries are likely to bear the brunt of the EU/US rivalry over GIs. In this context, it is in their interest to prioritize multilateralism and support negotiations in multilateral settings. Even if some Asia-Pacific countries have expressed strong criticisms of IPR multilateral institutions in the past, multilateral institutions might still be their best option for negotiating IPR.