- The Washington Times - Friday, June 3, 2005

BEIJING — U.S. Commerce Secretary Carlos Gutierrez took a hard stance on China’s rampant counterfeiting of American products as he kicked off his first official trip to China yesterday.

“Intellectual property rights are not up for negotiation, and frankly, abuse of intellectual property rights is not acceptable,” he told businessmen, adding that China’s rampant counterfeiting of American products was the top trade problem.

“Intellectual property rights violations are a crime, and we don’t believe we should be negotiating crimes with our trading partners.”

The U.S. Chamber of Commerce has estimated that global trade in fake and pirated goods, anything from designer dresses to digital video discs, costs the American economy $250 billion each year.

Industry groups estimate that U.S. music, movie and software companies lose as much as $3.8 billion per year in China from sales of pirated copies, a headache for companies like entertainment giant Walt Disney Co. and software titan Microsoft Corp.

U.S. Deputy Secretary of State Robert B. Zoellick said Monday that the United States could bring a World Trade Organization (WTO) case against China for piracy.

A case could take several years to conclude, but a finding against China by the WTO, the judge and jury of world trade, could result in substantial financial penalties against Beijing.

In contrast to the hard line over copyrights and patents, Mr. Gutierrez said Washington was willing to negotiate with Beijing on other issues, such as a dispute over China’s surging textile exports to the United States.

U.S. imports of some types of clothing from China have risen dramatically since Jan. 1, when a decades-old system of quotas on developing countries’ textile exports expired.

In response to the increases, the United States last month announced temporary restrictions on imports of products such as pants, shirts and underwear.

During a visit to China’s elite Tsinghua University later yesterday, Mr. Gutierrez defended himself from a barrage of criticism by students over the textile decision, saying the measures were temporary and were intended to give U.S. textile makers time to adjust.

“The reason we did it was that it was so fast, so sudden that it disrupted the market,” Mr. Gutierrez said of the rise in imports.

The flood of cheap clothes has given ammunition to critics, who say China is holding down the value of the yuan to give its exporters an unfair competitive edge.

Mr. Gutierrez, who became commerce secretary in February, did not comment on the currency, which has been pegged near 8.3 per dollar for a decade. But his Chinese counterpart, Commerce Minister Bo Xilai, warned the United States yesterday not to link the two issues.

“If the Chinese economic circle has such a feeling that other countries are using the textile issue as an excuse to force China to make some adjustment to the value of its currency, then it can make the whole situation even more complicated,” Mr. Bo said.

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