Tuesday, April 10, 2007

The U.S. will file two cases against China at the World Trade Organization in its efforts to stop Chinese piracy, the Bush administration said yesterday.

The administration wants the world trade body to clamp down on “inadequate” Chinese protection of U.S. copyrights and trademarks and on barriers China establishes against legitimate movies, DVDs, music and publications.

U.S. Trade Representative Susan C. Schwab announced the move yesterday at a press conference, flanked by a table loaded with boxes of fake versions of DVDs including “Walk the Line,” “Jarhead” and “Mr. and Mrs. Smith”; CDs including Mariah Carey and Luther Vandross; books, including a “Harry Potter” novel; and Zippo lighters.

She told reporters that the administration had planned to file the complaints in October, but held off when it seemed the issue could be resolved without litigation.

U.S. industries that rely on copyrights lost an estimated $2.3 billion in revenue to piracy in China in 2005 alone, and nine out of every 10 DVDs sold in China are illegal copies, according to the Motion Picture Association of America (MPAA).

The action comes as Democrats, who now control Congress, have taken a tougher line against China because of the skyrocketing U.S. trade deficit with that country.

House Ways and Means trade subcommittee Chairman Sander M. Levin, Michigan Democrat, called the announcement “long overdue.”

“No country in the world has done more to undermine American intellectual property than China, and yet we have not held them accountable to the rules of trade,” he said.

“The administration needs to follow up on today’s announcement to challenge and eliminate all of China’s theft, piracy and open their markets to genuine American goods. This is an important part of making vital expanded trade a two-way street.”

Yesterday’s announcement follows two other actions to toughen up on China: imposing sanctions on Chinese high-gloss paper imports last month, which was the first time duties have been imposed on a communist country for subsidizing an industry; and a February announcement that it would take China to the WTO over subsidies.

“We need to open China’s markets to legitimate commerce and eradicate this [intellectual property rights] theft and profiteering,” Mrs. Schwab told reporters in a presentation, during which she brandished a counterfeit version of the DVD “Night at the Museum,” which is not slated to be released in DVD form for almost two weeks.

Mrs. Schwab acknowledged that China has taken some steps to improve intellectual property protection and enforcement, such as stepping up raids on factories and stores dealing with pirated goods. She said, though, that there are “significant” problems that dialogue has not resolved.

“We hope the initiation of these two WTO actions will, first, encourage changes to laws and other measures that have stood in the way of effective protection of [intellectual property rights] in China for a wide range of products, and, second, tear down the legal barriers that keep legitimate copyrighted products from competing effectively in the Chinese marketplace,” she said.

Mrs. Schwab cited specific problems including the high level of violation needed for criminal charges and Chinese denial of copyright protection to works while they are waiting for censorship approval. She also cited limitations on who can import movies, DVDs, music and publications and limits on distribution of publications and videos.

The U.S. Chamber of Commerce announced its support for the action.

Myron Brilliant, the group’s vice president for Asia, said an announced Chinese crackdown last week is a step in the right direction, but “levels of counterfeiting and piracy in the market remain at unacceptably high levels, especially in the areas of books, music, videos and movies.”

MPAA Chairman Dan Glickman called the announcement “a welcome and logical next step in efforts to spur progress in China.”

“I am optimistic about the potential for a favorable resolution, and the resulting benefits for the U.S. motion picture industry,” he said.

A request for consultations is the first step in a WTO dispute. If the parties do not resolve a matter with a 60-day consultation period, the complaining party may refer the matter to the WTO dispute-settlement panel.

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