[A2k] Bridges Weekly: DISPUTE PANEL CREATED IN CHINA SUBSIDY CASE, AS US RATCHETS UP PRESSURE

[Thiru Balasubramaniam]

<SNIP>

At the same gathering, China blocked the creation of a separate panel
to examine the US' complaints that Beijing is tolerating intellectual
property rights violations and maintaining trade barriers against
books, music, and other copyrighted goods. WTO rules prevent China from
doing so a second time should the US repeat its request.

The US delegation said that consultations with China in June "did
provide some helpful clarifications," but failed to resolve the
dispute, which was initiated in April (see BRIDGES Weekly, 18 April
2007).

Washington claims that China is doing too little to enforce copyright
and trademark protection on a wide range of goods such as books, CDs,
and DVDs. It argues that Beijing sets an unacceptably high bar for
punishing copyright infringements with criminal prosecution, allowing
large-scale commerce to take place in pirated movies and music with the
threat of little more than an administrative fine.

Furthermore, the US contends that the Chinese government's policies on
intellectual property-right infringing goods - including counterfeits -
are too lax. It also says that China's denial of copyright law
protection to works that have not received censorship approval for
publication and distribution in the country allows for wide-scale
piracy without the risk of legal punishment.

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  http://www.ictsd.org/weekly/07-09-05/story5.htm

Volume 11 	Number 29 	5 September 2007

DISPUTE PANEL CREATED IN CHINA SUBSIDY CASE, AS US RATCHETS UP PRESSURE

The US is turning up the heat on China at the WTO, pushing separate
cases against Chinese tax and intellectual property policies.

A WTO dispute panel was created on 31 August to investigate allegations
by the US and Mexico that Beijing offers a series of illegal tax
refunds, reductions, and exemptions that discriminate against imports
while effectively subsidising the export of Chinese manufactured goods,
in contravention of international trade rules. At a meeting of the
Dispute Settlement Body that day, a US representative repeated
Washington's charges against China, and asked for the creation of a
single panel to jointly examine its claims along with Mexico's.
"Although we continue to prefer to reach a mutually agreed solution to
this dispute, unfortunately to date we have not been able to do so,"
said the delegate.

At the same gathering, China blocked the creation of a separate panel
to examine the US' complaints that Beijing is tolerating intellectual
property rights violations and maintaining trade barriers against
books, music, and other copyrighted goods. WTO rules prevent China from
doing so a second time should the US repeat its request.

The US delegation said that consultations with China in June "did
provide some helpful clarifications," but failed to resolve the
dispute, which was initiated in April (see BRIDGES Weekly, 18 April
2007).

Washington claims that China is doing too little to enforce copyright
and trademark protection on a wide range of goods such as books, CDs,
and DVDs. It argues that Beijing sets an unacceptably high bar for
punishing copyright infringements with criminal prosecution, allowing
large-scale commerce to take place in pirated movies and music with the
threat of little more than an administrative fine.

Furthermore, the US contends that the Chinese government's policies on
intellectual property-right infringing goods - including counterfeits -
are too lax. It also says that China's denial of copyright law
protection to works that have not received censorship approval for
publication and distribution in the country allows for wide-scale
piracy without the risk of legal punishment.

China's commerce ministry said that the US and Mexico's subsidy
complaint was based on "a huge misunderstanding of Chinese policies." A
statement on the ministry's website said that "some of the subsidies
mentioned in their lawsuit had already been abolished," and that a new
tax law had brought regulations into accord with WTO rules.

Notably, China argued that instead of genuine incompatibility between
its policy and WTO strictures, the case was "motivated by the need of
domestic politics" in both the US and Mexico.

The George W. Bush administration filed the two cases earlier this year
following heavy pressure from the new Democratic majority in Congress
to take action against perceived Chinese subsidy and intellectual
property rights violations, and also to fight artificially low currency
exchange rates that make Chinese and Japanese exports more competitive
(see BRIDGES Weekly, 28 March 2007). Several US politicians blame these
practices in part for the country's record trade deficits, as well as
politically-sensitive job losses in the manufacturing sector, although
many economists say that mechanisation is more responsible for the
latter.

Congress is currently considering legislation to encourage China to
boost the value of the yuan, although Reuters reports that progress is
unlikely before next month. One proposal threatens the withdrawal of
insurance and export financing, and raises the spectre of WTO
litigation should China not comply. The Bush administration has thus
far opposed demands for a WTO case against China's exchange rate
policy.

ICTSD reporting; "Congress could delay action on China currency:
aides," REUTERS, 4 September 2007; "WTO opens investigation into
alleged Chinese industrial subsidies," ASSOCIATED PRESS, 31 August
2007.

---------------------------------
Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
voice +41.22.791.6727
fax +41.22.723.2988
mobile +41 76 508 0997
thiru@keionline.org