US review of copyright piracy set to rock China ties

US may involve WTO if China does not enforce intellectual property rights, says official.

THE Bush administration has begun a comprehensive review of enforcement of intellectual property rights (IPRs) in China, an issue that could sour trade relations between the two economic giants.

US Deputy Trade Representative Karan Bhatia told The Straits Times that Washington would “explore all available avenues, including WTO litigation”, if there was no significant improvement on the issue with Beijing.

News about the review comes just two weeks after the United States hauled China before the World Trade Organisation for “illegal” industrial subsidies – a move that Japan has supported.

In its complaint, Tokyo will explain how Japanese companies have also been damaged by the subsidies, said the Nikkei newspaper yesterday, citing unnamed sources.

In what is seen as the largest action of its kind, with broad sanctions being threatened, officials here said Washington is targeting at least six Chinese export subsidy programmes that could cover up to 60 per cent of the country’s exports.

It is the third case the US has filed against China since it joined the WTO in 2001.

One case was resolved before it reached WTO arbitration and the other, filed with the European Union and Canada on board, is now at the formal dispute stage.

A possible case against China for copyright piracy of American goods would herald a fourth instance that could further escalate tensions between the two trading giants.

Mr Bhatia, who was speaking at a congressional hearing on China on Thursday, said Washington had been working to prepare a case challenging Beijing on IPR enforcement over the past year.

It held back from filing the case last October when China sought bilateral talks to address US concerns.

He said: “The rampant infringement of intellectual property rights that persists in China, in spite of efforts by central government officials to move against illegal practices, not only robs US businesses of billions of dollars a year in legitimate sales, it also weakens China’s development of its own knowledge-based industries.”

He told feisty lawmakers, who attacked rampant piracy of American goods in China, that the administration was consulting Congress and industry on steps to take.

“If we believe that negotiations offer a reasonable chance of success, we will continue to pursue them – a successfully negotiated outcome can be more efficient and as successful as a litigated outcome. But if it becomes clear that negotiations will not be successful, then we will proceed with WTO dispute settlement.”

Mr Bhatia also said there were a number of issues being discussed with China in relation to enforcement, “but the bottom line, what we want to see, is improvement on the ground”.

In his interview with The Straits Times, he said that Washington was carrying out an unprecedented provincial level review of China’s enforcement of IPR that would be published in the next three months.

He disclosed that US officials had begun a first round of trips to Chinese provinces to assess violations by looking at criminal prosecution records. In the process, they were carrying out interviews with local government officials and businessmen.

“We want to be as thorough and systematic as possible before we decide on a course of action,” he said.

Another potential WTO dispute would further strain bilateral trade ties. Efforts to ease these disputes have already suffered setbacks here.

Officials are now engaging in a damage control exercise, with the resignation of a top official in charge of the US-China strategic economic dialogue.

Mr Timothy Adams, the Under Secretary for International Affairs at the Treasury Department, left earlier this month. It was the second time in five months that the person in charge of overall talks with China had left.

His predecessor Deborah Lehr, a China specialist with private and public sector experience, quit after just six weeks on the job.

In both instances, the decision to leave was fuelled by differences over policy and a lack of personal chemistry with Treasury Secretary Henry Paulson.

Mr Paulson is under intense pressure from Congress to resolve a range of economic disputes, particularly getting the Chinese currency, the yuan, to float more freely on international currency markets.

Analysts here believe the WTO cases, coupled with little results from the economic dialogue, could only turn the heat on China as the US heads into its presidential primaries next year.

SELF-DAMAGE

“The rampant infringement of intellectual property rights that persists in China, in spite of efforts by central government officials to move against illegal practices, not only robs US businesses of billions of dollars a year in legitimate sales, it also weakens China’s development of its own knowledge-based industries.”
US DEPUTY TRADE REPRESENTATIVE KARAN BHATIA (above)

Pharmaceuticals
The US pharmaceutical industry has highlighted losses – at a “conservative” estimate of US$3.4 billion (S$5.2 billion) – from the manufacture and sale of fake medicine in China. US publishers in China last year suffered an estimated US$52 million in losses due to piracy on the Internet, according to the Association of American Publishers.

The world’s film industry lost US$2.7 billion in China in 2005, according to research commissioned by the Motion Picture Association of America, which claims that its own members alone took a loss of US$244 million in that year.

Movies
The world’s film industry lost US$2.7 billion in China in 2005, according to research commissioned by the Motion Picture Association of America, which claims that its own members alone took a loss of US$244 million in that year.

Publishing
US publishers in China last year suffered an estimated US$52 million in losses due to piracy on the Internet, according to the Association of American Publishers.

Select the fields to be shown. Others will be hidden. Drag and drop to rearrange the order.
  • Image
  • SKU
  • Rating
  • Price
  • Stock
  • Availability
  • Add to cart
  • Description
  • Content
  • Weight
  • Dimensions
  • Additional information
  • Attributes
  • Custom attributes
  • Custom fields
Click outside to hide the compare bar
Compare
Compare ×
Let's Compare! Continue shopping