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U.S., China Face Off Over Intellectual Piracy

  • Robert Lyle

Washington, May 9 (RFE/RL) - The showdown with China has been coming for a long time, but the U.S. this week made clear it is ready to impose major trade sanctions if Beijing does not quickly attack the rampant piracy of American films, music CDs and computer software going on within China. White House spokesman Michael McCurry said simply that if China does not live up to its commitments, "we will impose stiff sanctions." Chinese foreign ministry spokesman Shen Guofang reacted to the rumblings in Washington earlier in the week, saying Beijing would retaliate. American sanctions would have a "tremendous detrimental effect on U.S. business interests in China," he said. The dispute is years old. The U.S. says that Chinese-tolerated piracy of U.S. entertainment products on film and CD and business and personal computer software is costing American companies more than 2,000 million dollars a year. In it's most recent annual listing of trade problems, the U.S. Trade Representative's office said that china "remains the site of extensive piracy of intellectual property, particularly copyrighted sound recordings, music, videos and business and entertainment software." China has signed a number of agreements with the U.S. over the years to deal with the problem, most recently in February, 1995. The U.S. says that while there have been some small improvements since then, "piracy remains rampant and economic damage to U.S. industries continues to rise." It said China "has failed to stop illegal CD, video and CD-ROM production at some 31 plants operating in China, has failed to prevent the export" of those pirate-produced copies and continued to prevent "market access for legitimate audiovisual products." China denies the U.S. charge, noting in recent official publications that it had launched a "nationwide crackdown" on all forms of copyright infringement and piracy. It's law enforcement, it says, is "powerful and effective." The foreign ministry says that the 31 factories include 29 joint ventures operated with foreign companies, four from the U.S., and that all have "completed registration formalities." But White House officials say that while China agreed to close the factories or enter licensing or joint venture agreements to make them legitimate producers, so far only a handful had been closed. In addition, the U.S. officials say they have discovered 13 more "underground" operations -- apparently operating without Chinese government permission. Chinese officials respond that they can't be expected to keep up with every single plant opening, but U.S. officials answer that if the plants were turning out videos for political dissidents, they would be closed "in two days." U.S. deputy trade representative Lee Sanders is on his way to Beijing to resume discussions with Chinese officials. White House spokesman McCurry says there is still time to get the matter resolved. "We are hopeful that prior to May 15th, we'll see some steps by China that would alleviate the need for sanctions," he told reporters on Wednesday. "We're concerned any time a very important trading partner of the U.S. threatens a trade war," said McCurry. "We believe that a broad economic engagement with China is in the mutual interest of the people of China and the people of the United States." McCurry pointed out that the U.S. is not threatening to cut off China's Most-Favored-Nation (MFN) trade status. The sanctions under consideration by Washington, he said, will only be tariffs or other barriers against specific products from China. The sanctions will be "minimal compared to the overall impact of Most-Favored-Nation status," said McCurry. In terms of trade disputes, he said, the revocation of MFN is the "thermonuclear device of trade disputes."

Any sanctions will be designed to cost China the equivalent of the 2,000 million dollars the U.S. says it is losing in pirated American intellectual products. China sold nearly 46,000 million dollars in goods to the U.S. in 1995, four times more than it bought from the U.S. More than 60 members of the U.S. House of Representatives on Wednesday said they were introducing legislation to require the president to impose trade sanctions against China. "Enough is enough," said Congresswoman Nancy Pelosi (D-California). "It's time for talking to stop and to take action." The piracy of American music, film and software is not just for local consumption within China, she told a press conference. The pirated goods are for the most part being exported to world markets. "We not only have a lack of market access for intellectual property into China because they are ripping it off internally, but we have to compete with their pirated products in the rest of the world for our own products," she said. "We get hit both ways." The U.S. says the middle of May was the deadline understood when the February 1995 agreement on intellectual property rights was signed and China can't avoid the issue. McCurry says that the threat of trade sanctions often "creates some new life to negotiations."