[A2k] NYT on US-China IPR disagreements

[Robin Gross]

http://www.nytimes.com/2007/04/07/business/worldbusiness/07trade.html?ex=3D=
1333598400&en=3D60394649677870c3&ei=3D5088&partner=3Drssnyt&emc=3Drss

Piracy Move on China Seen as Near

By EDMUND L. ANDREWS
<http://topics.nytimes.com/top/reference/timestopics/people/a/edmund_l_andr=
ews/index.html?inline=3Dnyt-per>
Published: April 7, 2007, NY Times

WASHINGTON, April 6 =97 After months of prodding China to crack down on
pirated copies of American movies, music and software, the Bush
administration appears ready to escalate the dispute into a legal
confrontation.

In recent weeks, administration officials have strongly hinted that they
are close to filing a formal trade complaint against China at the World
Trade Organization
<http://topics.nytimes.com/top/reference/timestopics/organizations/w/world_=
trade_organization/index.html?inline=3Dnyt-org>,
saying that China has failed to prosecute all but a small fraction of
the ubiquitous and visible street trade in bootlegged American
entertainment.

=93The United States has made it clear that formal W.T.O. consultations
will be necessary without concrete actions by China in this area,=94 the
office of the United States trade representative warned this week in its
annual trade report to Congress.

The administration went on to complain about =93inadequate=94 enforcement o=
f
intellectual property rights =97 copyrights, patents and trademarks =97 in
movies, music, books, pharmaceuticals, software and many other areas.

The China Copyright Alliance, an industry coalition that includes
Hollywood studios, independent movie and television producers and the
recording industry, has been pushing the administration for months to
file a formal legal complaint. Administration officials have made it
clear they are preparing to do so.

=93We=92re all going to run out of patience at some point, and that=92s goi=
ng
to be sooner rather than later,=94 said Susan C. Schwab, the United States
trade representative, in a speech on Feb. 22.

Bloomberg News, citing industry executives who said they had been
briefed by the administration, said Ms. Schwab was likely to file two
complaints against China as early as next week.

Sean Spicer, a spokesman for the trade representative, refused to
comment on administration plans. But industry executives have been
expecting a formal complaint.

=93It=92s a sign of growing impatience, including within the business
community,=94 said William A. Reinsch, president of the National Council
on Foreign Trade, an association that represents companies on
international trade issues.

Industry executives said they had been waiting for the Bush
administration to file two separate complaints. One addresses what
American companies say is China=92s reluctance to use criminal laws for
people caught selling DVDs with pirated material on them.

A second complaint would be about expanding =93market access=94 for America=
n
products in China.

If the United States files the twin actions, it would be the third time
this year that the Bush administration has sought to pressure China for
its trade practices, signaling a tougher policy after taking a largely
conciliatory approach for six years.

On March 30, the United States announced it would reverse more than 20
years of practice and impose potentially steep tariffs on Chinese
manufactured goods on the ground that China is illegally subsidizing
some of its exports.

In February, the administration leveled a complaint with the world trade
group that China subsidizes a number of industries in violation of trade
rules.

The growing American trade deficit with China, which reached a record
$232.5 billion last year, has been denounced by Democrats as the cause
of hundreds of thousands of lost jobs. Many Democrats elected last fall
campaigned for a tougher policy on trade with China, and Democrats have
threatened to pass legislation to retaliate. Any new legal actions
against China over intellectual property could be an effort to preempt
those.

Chinese authorities have made moves in recent days to head off a legal
confrontation. On March 26, China=92s National Anti-Piracy and Pornography
Office announced that it had raided a storage facility in Guangzhou,
after receiving information from the Motion Picture Association, and
seized what it said were about 1.6 million pirated copies of movies and
television shows.

This week, the Chinese Embassy in Washington announced that China=92s
Supreme Court had issued a =93new judicial interpretation=94 that would
lower the threshold under which prosecutors are allowed to charge people
under criminal laws against piracy.

Until this week, prosecutors could impose administrative penalties only
on people caught with fewer than 1,000 illegal DVDs. Now the threshold
will be just 500 DVDs

But those moves are not enough to satisfy the movie industry or the
recording industry. Nor are they likely in themselves to make a serious
dent in the open sales of bootlegged music and software. In big cities
like Shanghai, vendors sell pirated goods along major thoroughfares like
the Nanjing Road as well as along bridges, small roads and alleyways.

Dan Glickman
<http://topics.nytimes.com/top/reference/timestopics/people/g/dan_glickman/=
index.html?inline=3Dnyt-per>,
president of the Motion Picture Association of America
<http://topics.nytimes.com/top/reference/timestopics/organizations/m/motion=
_picture_association_of_america/index.html?inline=3Dnyt-org>,
told a Congressional hearing in February that movie producers were
worried that pirated copies of American movies would not only lead to
lost sales in China but be exported around the world and even back to
the United States.

=93We have walked a long way down the China road, looking and hoping for
improvement,=94 Mr. Glickman testified. =93We may be nearing the end of tha=
t
course and deciding on whether to take another.=94

The broader issue is how China reacts to any legal complaint that the
United States might bring. It is unclear whether the W.T.O. would agree
with the United States, and it is even less clear what kind of
punishments it would allow even if it did rule against China.

If the new complaints are filed, under the trade organization=92s rules,
the United States would formally ask for =93consultations=94 with China.
After 60 days, it would be allowed to ask for an independent panel of
the World Trade Organization to consider the dispute. That process often
takes years to complete.

David Barboza contributed reporting from Shanghai.