EU Trade Commissioner Peter Mandelson and Vice minister of the Chinese Ministry of Commerce Ma Xiuhong attended the signing of a Memorandum of Understanding between Beijing retail markets and foreign brand owners in the sportswear and fashion industries to join the fight against the sale of counterfeit goods in Beijing retail markets. Representatives from the Beijing Municipal government and the Beijing Intellectual Property Office were also present. The agreement is an attempt to head off further litigation against Beijing retail market landlords through a voluntary agreement to crack down on intellectual property theft and piracy.

Speaking at the ceremony, Mandelson said: "The protection of intellectual property goes to the heart of our economic relations. That is why this initiative is highly significant and should be an important step to maintain confidence in these markets: I hope we can build further on this foundation."

Commenting on the agreement on behalf of the participating brand owners, trademark counsel for Louis Vuitton, Nathalie Moulle Berteaux said: "Counterfeiting in China of famous foreign brands has grown in the last few years in parallel with China’s tremendous economic development. Today’s agreement is a private sector solution to the harm caused by counterfeiting and will hopefully result in significant changes in Beijing markets, in time for the 2008 Olympics."

The agreement sets out a new framework for trademark owners and landlords to cooperate in the fight against sales and offers for sales of counterfeit goods under a proposed "Two-Strike Rule". Upon receipt of evidence of first violation by a particular vendor, landlords will agree to suspend the operations of the vendor for a certain period. Following a second report of the sale of counterfeits of any of the participating brands by the same vendor, that vendor’s lease would be terminated and the vendor ejected from the market.

The landlords of major Beijing retail markets such as Silk Street, Hongqiao and others have also agreed to work with the brand owners to develop a new standard rental agreement which clarifies the obligations of vendors to respect intellectual property rights and sets out the potential consequences for counterfeiting in greater detail.