CHINA SLAMS U.S. PIRACY COMPLAINT
CHINA SLAMS U.S. PIRACY COMPLAINT
2007-04-12 at 3:47:00 pm #17529
China slams US piracy complaint
China has criticised the
US over its decision to file a formal complaint with the World Trade
Organization over copyright piracy and counterfeiting.
The US says that China’s failure to enforce
copyright laws is costing software, music and book publishers billions of
dollars in lost sales.
The US also argues that China makes it hard
for legitimate firms to operate.
China “expressed great regret and strong
dissatisfaction at the decision”, the state news agency said.
The Xinhua news agency quoted Intellectual
Property Office commissioner Tian Lipu as saying that it was “not a
sensible move for the US government to file such a complaint” at the World
Trade Organization (WTO).
“By doing so, the US has ignored the
Chinese government’s immense efforts and great achievements in strengthening
intellectual property rights protection and tightening enforcement of its
copyright laws,” the commissioner added.
On Monday, the US trade representative Susan
Schwab said that piracy and counterfeiting levels in China remained
The US said that despite China’s promises to
crackdown on fake software, DVDs, luxury goods, car parts and shoes, many of
the goods were still widely available throughout the country.
China is one of the world’s largest producers
of counterfeit products, ranging from designer clothes, to pirated films and
music, to luggage.
Many of the goods find their way into Europe
and are knowingly bought as fakes by shoppers at markets and from street
vendors. Firms claim that the poor quality copies dent their brand and divert
profits and potenital clients.
The US has been threatening a WTO complaint
against China since 2005.
It said on Tuesday that the two cases had
been submitted to the WTO.
One case claims that Beijing’s poor
enforcement of copyright and trademark protections violates WTO rules. The
other contends that illegal barriers to hamper sales of US films, music and
“Excessively high legal thresholds for
launching criminal prosecutions offer a safe harbor for pirates and
counterfeiters,” the US said.
“Pirates and counterfeiters who
structure their operations to fit below those thresholds face no possibility of
A 60-day consultation period follows for
negotiators to try to resolve the disagreements. Should this fail, then a WTO
panel would rule on the case.
Piracy Case May Raise Tensions With China
WASHINGTON (April 07) – The Bush administration formally
took its longstanding spat with China over pirated movies, music and books to
the World Trade Organization. The move represents a further increase in trade
tensions between the two countries.
U.S. Trade Representative Susan
Schwab made the
official announcement. “Piracy and counterfeiting levels in China remain
unacceptably high,” Ms. Schwab said in a prepared statement.
While acknowledging China’s leaders have made progress to improve property rights
protections for movies, music, books and other goods, she said the U.S. and
China haven’t been able to agree on legal changes the U.S. believes are needed
for China to comply with its commitments as a member of the WTO.
The U.S. plans Tuesday to ask for dispute-settlement consultations from the WTO
on two matters: one claiming deficiencies in China’s legal structures to
protect and enforce copyrights and trademarks; and the other challenging
barriers to China’s market for books, music, videos and movies.
The Chinese Ministry of Commerce didn’t have any immediate comment on the
expected move, which was reported in Saturday’s editions of The Wall Street
Journal and New York Times.
While supported by the U.S. movie and music businesses, the complaints have
stirred unease among executives of other U.S. industries, including drug
companies and high-tech manufacturers. Many fear that a clash with China over
piracy could undermine the increasing cooperation they have won over the past
year with local Chinese officials on combating the problem.
Ma Xiushan, deputy general secretary of the China Intellectual Property
Society, said the cases will be seen as a negative signal from the U.S. at a
time “when China is working very hard to narrow our distance from the U.S.
and other developed countries in intellectual property rights protection.”
Henry Gao, a former WTO official who teachers at the University of Hong Kong
now, said, “I am not sure the U.S. can win this case.” He noted that
the criminal penalties for piracy in China are, under WTO rules, supposed to be
“consistent with the level of penalties applied for crimes of a
corresponding gravity.” It isn’t obvious what crimes are equivalent to
being caught with 500 CDs, he said. “This is where the U.S. will have to
come up with some really good arguments.”
“This will drag the WTO into sensitive political issues and I think the
WTO probably will be very cautious here,” he added. Yet he noted that in
the past China has taken action to defuse WTO complaints before they come to a
China has taken a number of steps recently to crack down on piracy, increasing
penalties and lowering the thresholds for what constitutes a criminal act.
Chinese provincial authorities have worked alongside U.S. industries to carry
out a series of raids against factories and warehouses trafficking in
“The piracy issue is a world-wide issue,” said Chen Zhaokuan, deputy
director of the Copyright Society of China. “Many countries are facing the
same challenges in their anti-piracy campaigns. For China, we are a later-comer
in this area, and it’s natural that the sense of copyright protection among the
Chinese people is not that strong. Considering how much work we have done to
promote the copyrights protection and to fight against piracy in the past 10
years, we already have made many achievements.”
U.S. industry groups that aren’t expected to support the WTO cases include the
Business Software Alliance, whose members include Microsoft Corp. and Apple Inc., and the Pharmaceutical Research and
Manufacturers of America, the drug industry’s main trade group. Both sectors
have made their own market-access and antipiracy advances and don’t want to see
that work disturbed, administration and industry officials said.
The cases add to a list of U.S. trade actions against China in recent months.
The administration in February filed a WTO case alleging that Beijing doled out
unfair subsidies to a range of Chinese industries, while last month the
Commerce Department broke decades of precedent by opening the way for U.S.
companies to seek higher tariffs on some Chinese paper imports found to have
benefited from government subsidies.
The first case will make a number of specific complaints against China’s
enforcement of its own piracy laws. Current Chinese law says that in the case
of counterfeit CDs, for instance, one must be caught with at least 500 to be
charged with a crime. The U.S. will argue that there should be no such
The case will also argue that it should be illegal to either
distribute or produce counterfeit goods. Chinese law requires one to be caught
doing both before being charged.
“This case is going to be very technical, very targeted and very
specific,” said one industry official with knowledge of the
The other complaint will target what the U.S. alleges to be overly restrictive
rules on the distribution of foreign CDs, DVDs, books and other media products.
The case won’t seek to overturn the limit placed by Beijing on foreign films
that are allowed to show in Chinese theaters, which is now set at 20 films a
DVDs of Hollywood blockbusters and CDs of the latest pop hits are readily
available in shops or on streetcorners in Chinese cities. Almost all of them –
90% or more, according to most industry estimates — are illegal copies. The
problem has also stunted the development of China’s own film industry, as
pirated DVDs hit the market so quickly that most films can make little money
from ticket sales or legitimate DVD sales.
One reason the U.S. is also pushing its complaint about restrictions on
distribution of foreign movies is that there is currently little legally
available content to compete with pirated versions in China. As previously
reported, studios like Fox and Warner have been trying to market legitimate DVD
products in China at prices the local market can bear in an effort to wean
Chinese consumers off pirated alternatives.