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U.S.-China Trade Fight May Be Good News for CIS

Washington, May 16 (RFE/RL) -- The developing U.S.-China trade war over intellectual property piracy, with projected 100 percent tariffs on many of each others imports, could be good news for most of the nations of the former Soviet Union.

The bulk of the U.S. tariffs to be imposed on Chinese imports next month are on textiles and apparel, products for which China has been the largest single supplier to American markets. With an effective doubling in prices of the Chinese goods, American importers are going to be looking for other sources and countries. Russia, Moldova, Tajikistan, and Kazakhstan could be among major benefactors.

Ironically, Ukraine, the former Soviet republic with one of the larger shares of textile and apparel business with the U.S. can't really benefit from the windfall because its exports to America are limited by a bilateral agreement on clothes and cloth.

Similarly, the nations of Central and Eastern Europe -- Bulgaria, the Czech Republic, Hungary, Poland, Romania, and the Slovak Republic -- are prevented by textile quota agreements from shipping any additional clothes or textiles into the U.S.

The fact that most of the countries of the former U.S.S.R. -- and a number of other nations, such as Mexico, Canada, and those in the Caribbean Islands -- are not covered by textile quotas means they can quickly fill the demands of the American market.

Acting U.S. Trade Representative Charlene Barshefsky said that in announcing the proposed tariff increases, the products selected were designed "to minimize the adverse impact on U.S. consumers" because other suppliers are readily available.

Russia's exports of textiles into the U.S. market have been rising rapidly in the last two years, exceeding 76 million dollars in the first nine months of last year alone. Ukraine's textile sales to the U.S. in the same period exceeded 57 million dollars.

Belarus has also become a large supplier to the American market, selling nearly 12 million dollars worth of textiles and clothing articles in the first three-quarters of 1995.

Moldova has started to sell more textiles to the U.S. as well, exceeding 3.5 million dollars worth from January to September of last year, three times more than it sold to the U.S. in all of 1994.

Other former Soviet states that began increasing their sales of textiles and apparel to the U.S. in the first nine months of 1995 include: Armenia, 254,000 dollars; Azerbaijan, 225,000 dollars; Kazakhstan, 1.5 million dollars; Kyrgyzstan, 59,000 dollars; Tajikistan, 5.3 million dollars; Turkmenistan, 250,000 dollars; and Uzbekistan, 364,000 dollars.

While China's sales to the U.S. in the general category of textiles and apparel exceeded 4,000 million dollars in the first nine months of 1995, not all of those items are included in the proposed tariffs.

Barshefsky says about 2,000 million dollars worth of textiles and apparels are included in the preliminary list released Wednesday. In addition the list includes 500 million dollars worth of consumer electronics and 500 million dollars in consumer goods, such as decorative wood boxes, cardboard cartons, jewelry, and steel wool pot-scrubbing pads.

After comments from affected businesses and interested consumers, the list will be pared to a total of about 2,000 million dollars and will take effect June 17th. The 2,000 million dollar figure represents what the U.S. believes that Chinese piracy costs American owners and producers of intellectual property items, such as music CDs, films, computer programs and records. Industry groups broadly applauded the U.S. move.

The President of the Interactive Digital Software Association, Douglas Lowenstein, said the piracy hurts far more than just U.S. producers of creative products. He says that "about half the illegal production of entertainment (computer) software in China is exported," so the U.S. action is "about protecting legitimate markets" in nations such as "Russia, which are increasingly endangered due to illegitimate software production in China."

The U.S. Motion Picture Association said it strongly supported the move because since the 1995 China-U.S. agreement to end the piracy, the "illegal production of Video Compact Discs (VCDs) in China has actually increased, with thousands of these illegal productions" going around the world. The U.S. Business Software Alliance said American computer software developers and producers are losing hundreds of millions of dollars in sales globally because of the piracy. In fact, says the association, in China, "only one computer program in 50 is legal."

The British and Canadian music industry associations joined in supporting the American action. The U.S. Association of Importers of Textiles and Apparel, however, called the action "incredible" and "illegal." Association Executive Director Laura Jones said China was "absolutely irreplaceable as a supplier for low-income consumers" in the U.S. and that the retaliatory tariffs are "outrageous and hypocritical."

Barshefsky emphasized that the U.S. did not act precipitously. "We do not take the move to retaliation lightly," she told a press conference. "But when other countries do not live up to their trade agreements with the United States, we will take action."