Trade Complaints Against China

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The New York Sun

GENEVA (AP) – America filed two new complaints against China at the World Trade Organization on Tuesday over copyright policy and restrictions on the sale of American movies, music and books, trade officials said.

The filing comes a day after American Trade Representative Susan Schwab said American companies were losing billions of dollars annually from piracy levels in China that “remain unacceptably high.”

The Chinese Commerce Ministry on Tuesday expressed “strong dissatisfaction” at the American action.

“The two cases have been formally submitted,” said Magda Siekert, a spokeswoman for the American mission to international organizations in Geneva. The formal requests for consultations were not immediately made available.

The American submissions Tuesday trigger a 60-day consultation period during which trade negotiators from both countries will try to resolve the two disputes. If that fails, America. can ask for the WTO to establish investigative panels. It would likely take years for any retaliatory sanctions to be authorized.

One case contends that Beijing’s lax enforcement of copyright and trademark protections violates WTO rules, Schwab told reporters in Washington on Monday. The other argues that Beijing has erected illegal barriers to the sale of American-produced movies, music and books in China.

“Excessively high legal thresholds for launching criminal prosecutions offer a safe harbor for pirates and counterfeiters,” the office of the USTR said on its Web site. “Pirates and counterfeiters who structure their operations to fit below those thresholds face no possibility of criminal sanction.”

China is one of the world’s biggest sources of illegally copied goods ranging from movies, music and designer clothes to sporting goods and medications. But the WTO’s scope would focus on whether Beijing has taken sufficient action to fight intellectual property theft.

“The Chinese government has always been firm in protecting intellectual property rights and attained significant achievements in this respect,” Commerce Ministry spokesman Wang Xinpei said in a statement.

Mr. Wang criticized the American action and said it “will seriously undermine” economic and trade relations between the two countries.

The American complaints were filed shortly after reports that China plans to buy in excess of $16.2 billion in American goods when a major delegation visits Washington in May for talks on trade tensions.

The new cases, however, threaten to add tension ahead of that trip – the latest round of a “strategic economic dialogue” led by American Treasury Secretary Henry Paulson and Chinese Vice Premier Wu Yi. The dialogue is meant to address issues ranging from market access to complaints about Chinese currency controls.

The new cases are the latest move against China by the Bush administration, which is trying to deal with rising political anger over America’s soaring trade deficit, which set a record for the fifth consecutive year in 2006 at $765.3 billion. The Ameerican imbalance with China grew to $232.5 billion, the highest ever with a single country.

On Tuesday China reported a sharp monthly drop in its ballooning trade surplus with the whole world, saying it fell in March to $6.9 billion, down from $23.7 billion in February, but economists said the decline was probably only temporary.

Even with the drop, however, China’s global export gap for the full January-to-March quarter doubled in size compared with the same period last year, reaching $46 billion, according to the figures. Its surplus last year rose 74 percent to reach a record $177.5 billion.

China’s top intellectual property official also reacted angrily to American complaints.

“To do a better job in combating piracy, we need dialogue and cooperation, not confrontation and condemnation,” the official Xinhua News Agency quoted Tian Lipu as saying.

The second case – focusing on China’s obligations under the General Agreement on Trade in Services and the terms which it entered the global commerce body in 2001 – alleges that Beijing has failed to remove import and distribution restrictions on copyrighted American goods including newspapers, magazines, CDs, DVDs and video games.

For some products, distribution is limited to Chinese state-owned companies, America contends. For others, foreign companies face restrictive requirements that do not extend to Chinese competitors.

The Bush administration filed a WTO case earlier this year against China’s use of government subsidies to support Chinese companies and joined with Canada and the European Union last October in asking the 150-member body to formally investigate China’s tariffs on the import of foreign auto parts.

A first decision in the car parts dispute – which came as a five-year transition period following Beijing’s entry into the WTO was ending – is expected later this year.

Democrats, who won control of both the House and Senate last fall with campaigns that attacked Bush trade policies, said Monday that tougher action was still needed.

American lawmakers are threatening to introduce measures to compel Beijing to relax controls on its currency, the yuan, which critics say prices Chinese goods at unfairly low levels, hurting foreign competitors.

Beijing has let the yuan rise by 4.6 percent against the dollar since a July 2005 revaluation, but Washington wants faster action.

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AP Economics Writer Martin Crutsinger in Washington, D.C., contributed to this report.

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On the Net:

American Trade Representative: http://www.ustr.gov


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