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China risks sanctions with rampant piracy

China could face sanctions by the US and other governments if it fails to stamp out "epidemic levels" of product piracy that deprive foreign firms of potential sales of up to US$50 billion in everything from heart medicine to golf clubs, a US envoy said yesterday.

China's leaders appear committed to enforcing foreign patents and copyrights, but they have yet to stop local officials who protect pirates, said William Lash, a US assistant commerce secretary.

He said Washington is pressing Beijing to imprison violators who now are usually only fined, if they are punished at all.

China is driving a worldwide trade in pirated goods, despite signing commitments as long ago as 1995 to crack down, Lash said.

He said China far out-strips the No. 2 source, Russia, which accounts for an estimated US$1 billion in annual losses to legitimate producers.

Chinese product piracy accounts for up to US$50 billion in annual losses worldwide -- US$24 billion to US producers alone, Lash said.

"The piracy has spread, has gotten to epidemic levels, which is triggering action," Lash told reporters following meetings this week with Chinese trade and legislative officials.

The US hasn't decided what penalties it might impose, but a "growing chorus" of governments want to bring a joint complaint to the WTO, he said.

"Our Congress is looking at a lot of actions," including blocking access to US markets for some Chinese state firms and shipping lines, Lash said.

"The WTO is also an option, and that's an option that every other major manufacturing country is looking at, not just the US," he said.

China publicized the arrest in July of two Americans accused of leading a gang that sold 100,000 Chinese-made counterfeit DVDs in 25 countries.

But the US is frustrated at China's failure to prevent local officials from shielding pirates, Lash said.
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