- The Washington Times - Wednesday, April 19, 2006

When President Bush meets Chinese President and Communist Party chief Hu Jintao today, the issue of China’s rampant piracy of intellectual property will be on the table. Again. Whenever presidents named Bush meet Chinese strongmen, China’s pervasive, effectively institutionalized theft of American intellectual property is on the agenda.

In February 1989, when President George H.W. Bush met with Chinese Premier Li Peng and China’s supreme leader, Deng Xiaoping, the issue of piracy was discussed. Between those meetings in China and today’s White House meeting between Presidents Bush and Hu, Chinese leaders have made seemingly countless pledges to crack down on software, music, trademark and video pirates. Indeed, during President Clinton’s first term alone, the Chinese and American governments reached two major anti-piracy agreements. Yet, according to a report issued last year by the U.S. trade representative, more than 90 percent of “virtually every form of intellectual property” is pirated in China.

As Greg Mastel, a former chief international trade adviser on the Senate Finance Committee, has observed, the term intellectual property “refers to patented, copyrighted and trademarked material,” including “computer programs, pharmaceuticals, agricultural chemicals, musical recordings, videos, automotive designs and even clothing emblazoned with the image of Mickey Mouse.” Pirated motion picture DVDs regularly become available in China before American studios release the DVDs in the United States. The Business Software Alliance, an industry lobbying group, estimated that more than 90 percent of computer software installed in China last year was illegal. China is in a class by itself in counterfeiting trademarked luxury goods. In 2004, for example, U.S. Customs officials reported that 67 percent of counterfeited goods seized at American borders was produced in China. The value of the confiscated goods was $134 million.

With America’s trade deficit with China passing the $200 billion level last year, it is simply intolerable for China to continue the rampant piracy of the products in which American manufacturers enjoy a comparative advantage. Yet Beijing continues to take very small steps to redress this glaring problem. For example, in recent days (more than two decades after the thievery became commonplace in China), Chinese officials have once again promised to shut down factories producing illegal music CDs. Also, China only recently affirmed its intention to require legally obtained software to be installed on personal computers at Chinese factories. The Financial Times recently reported that Chinese trade negotiators considered it “a concession” to clamp down on computer-software piracy by allowing software to be pre-loaded on computers at the factory. Apart from whether such a policy will actually be enforced, the obvious question is: Why is such a commonsense policy taking so long to implement? The Business Software Alliance estimates that the Chinese pirated $3.5 billion in software in 2004.

Nobody claims that clamping down on piracy will erase the burgeoning trade deficit with China. However, if Chinese officials continue to flagrantly fail to make an honest effort, they will invite retaliation from the protectionists in Congress. And the consequences of a tit-for-tat trade war could seriously threaten the economies of both nations. Mr. Hu needs to act in his own self-interest.

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