China remains the world’s leading source of piracy and counterfeit products, the United States Trade Representative (USTR) concluded.

This assessment was included in the USTR’s 2022 Special 301 Report on the State of Intellectual Property (IP) Protections.

For example, a recent report identified China and Hong Kong as the largest exporters of counterfeit food and cosmetics, accounting for approximately 60% of customs seizures of counterfeit food products and 83% of customs seizures of counterfeit cosmetics.

As in previous years, China and Hong Kong account for more than 83% of IP seizures in the United States.

For the USTR, the failure to curb the widespread manufacture, domestic sale, and export of counterfeit products affects not only rights holders, but also the health and safety of consumers.

The production, distribution, and sale of counterfeit medicines, fertilizers, pesticides, and pharmaceutical ingredients remain «widespread» in China.

According to the report, rights holders point to national plans to crack down on counterfeit medicines and new criminal penalties under the amended Criminal Law as positive developments.

Piracy

However, rights holders raised concerns regarding the reported deprioritization of the prosecution of IP-related offenses and the reduction in the use of criminal sanctions.

Furthermore, as the leading manufacturer and exporter of pharmaceutical ingredients, China still lacks effective regulatory oversight.

In particular, China does not regulate manufacturers that do not declare their intention to manufacture active pharmaceutical ingredients (APIs) for medicinal use.

It also does not subject exports to regulatory review, allowing many bulk chemical manufacturers to produce and export APIs outside of regulatory controls.

In addition, China lacks central coordination for the enforcement of counterfeit pharmaceutical products and ingredients, resulting in ineffective enforcement at the provincial level and with respect to online sales.

This report provides an opportunity to highlight foreign countries and laws, policies, and practices that fail to provide adequate and effective IP protection and compliance for United States inventors, creators, brands, manufacturers, and service providers. which, in turn, hurts American workers whose livelihoods are tied to America’s innovation- and creativity-driven sectors.