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Updated September 15, 2023
Intellectual Property Rights (IPR) and International Trade
Intellectual property rights (IPR) protection and
enforcement are key components of U.S. trade policy, and
the United States plays a leading role in global IPR trade
(Figure 1). Congress has a constitutional responsibility to
legislate and oversee IPR matters in U.S. trade policy. Since
1988, Congress has included IPR protection as a principal
objective in U.S. free trade agreement (FTA) negotiations
(P.L. 100-418). Debates over IPR issues have intensified
with China and other emerging markets' growing role in the
global economy, the emergence of new technologies and
digital trade, and issues posed by the COVID-19 pandemic
about global access to medicines.
Figure 1. IPR Trade for Selected Countries, 2022
ons of U.S. $
EU 09.
US el $512
Iapn 465
Switzerland 3 F Receipts (Exports)
China * 3 Paymet (;mports
Source: WTO, World Trade Statistical Review 2023. Figure, CRS.
Note: Preliminary estimates for 2022. Charges for the use of IP
include the use of proprietary rights and for licenses to reproduce or
distribute IP; licensee payments can take various forms, such as
royalties and fees. EU = Extra-EU trade.
Background
IPR are time-limited legal rights granted by governments to
creators to prevent others from making, copying, selling, or
otherwise using their creations. IPR include patents,
copyrights, trademarks, undisclosed data (trade secrets),
and geographical indications (GIs). IPR generally aim to
foster innovation and creative output by permitting IPR
holders to benefit from the creations exclusively for some
time and/or negotiate payment for the use of intellectual
property (IP) by others (e.g., royalties), allowing holders to
recoup expenses (e.g., R&D). After the IPR expire, others
can build on the innovations. The exclusivity granted to IPR
holders may raise prices or limit access to protected goods.
Some Members of Congress and stakeholders have debated
the validity of the arguments behind these rationales, such
as how IPR protections can affect access to medicines.
IP and Economic Impact. The U.S. government generally
assesses IP to be important to U.S. innovation, economic
growth, and comparative advantage internationally. A range
of U.S. industries rely on IPR protection. Lawful limitations
to IPR (e.g., fair use copyright exceptions for media,
research, and teaching) can also further innovation and add
value. IP licensing and use fees comprised 14% of U.S.
services exports and 8% of U.S. services imports in 2022.
In 2019, China overtook the U.S. historical lead to become
the top patent filer under the Patent Cooperation Treaty
(PCT) system, administered by the World Intellectual
Property Organization (WIPO). China and the United States
comprised, respectively, 25.2% and 21.2% of total PCT
application filings (278,100) in 2022. Some analysts have
noted that patent filings are one of several indicators of
innovation levels and that patents may vary in quality.
IPR Infringement. Given its illicit nature, IPR
infringement can be difficult to quantify. Innovation can be
costly and time-consuming, but IPR infringement may incur
relatively few penalties and high profits. The digital
environment heightens enforcement challenges, given the
growth of online piracy and other factors. Globally, trade in
counterfeit and pirated goods reached an estimated $464
billion, or 2.5% of global trade in 2019 (Organization for
Economic Cooperation and Development/European Union
[EU]). In FY2022, U.S. Customs and Border Protection
(CBP) reported seizing 20,812 shipments of IPR-infringing
goods, with an estimated value of nearly $3 billion. China,
which historically has been home to a robust counterfeit
goods trade, remained the largest source of such seizures.
U.S. Trading Partners' IPR Regimes. While many U.S.
trading partners have strengthened IPR laws and
enforcement, some aspects of their regimes continue to
pose trade and investment barriers for U.S. firms. The
Office of the U.S. Trade Representative (USTR) has cited
as key concerns some trading partners' lax border and
criminal enforcement against counterfeits, including in the
digital environment; high levels of digital piracy; and gaps
in trade secret protection and enforcement. For instance,
China's technology transfer and other industrial policies
may disadvantage U.S. IP holders in these markets. Among
developed economies, the EU approach to GIs, for
example, may limit market access for U.S. exporters of
products that are common food names, and EU approaches
to regulation of the digital economy and artificial
intelligence affect U.S. IP (e.g., addressing illegal sharing
of copyrighted content, transparency obligations for online
platforms with respect to content moderation).
Trade Pohcy Tools for IPR
The use of trade policy to advance IPR internationally
emerged prominently with the former 1994 North American
Free Trade Agreement (NAFTA) and World Trade
Organization (WTO) 1995 Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS). As IPR
took on a greater role in trade, differences in countries' IPR
regimes led to frictions in global commerce. International
trade rules governing IPR aimed to bring more certainty
and address IPR-related disputes more systematically.
Multilateral IP Rules. TRIPS established minimum
standards of IP protection that most WTO members must
provide, based on core WTO nondiscrimination principles.
It set civil, administrative, and criminal enforcement
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