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US files WTO complaint against China

US Trade Representative Susan Schwab holds a pirated DVD copy of Night at the Museum, which is to be released on April 24, during a news conference on Monday in Washington. The pirated material, made in China, was brought into the US last week. PHOTO: AP

The US formally lodged its WTO complaint against copyright piracy in China yesterday, with fake DVDs and counterfeit luxury goods the latest issue to sour trade relations between the giants.

A Geneva-based official, who requested anonymity, said the US trade delegation in Geneva had handed the documents detailing the complaint to the WTO, activating the global trade body's dispute settlement process.

US Trade Representative Susan Schwab, announcing the action against China, had said on Monday that piracy and counterfeiting levels in China remained "unacceptably high" despite Beijing's stated commitments to tackling the problem.

The US has also filed a separate case accusing China of restricting distribution of foreign music, films and books, further sharpening tensions with the booming Asian giant.

wto arbitration

Under WTO rules, the two countries will have 60 days to try to iron out their differences. If they do not reach agreement, Washington will then have the right to demand WTO arbitration.

If the US case were ultimately upheld by a settlement panel, the US could then gain the right to impose retaliatory duties and tariffs on Chinese imports.

US firms claim the wide availability of counterfeit goods such as DVDs, software, luxury goods, books, auto parts, footwear and pharmaceuticals deprives them of billions of dollars of revenue per year.

China joined the WTO in 2001 and enjoyed a grace period in the first few years of its membership, but members such as the US are now flexing their muscles and demanding stricter enforcement of trade rules.

A report by the office of the US Trade Representative last December said China's record in implementing its WTO commitments was "decidedly mixed."

In March last year, the US launched a complaint over Beijing's tariffs on foreign parts for local auto assembly, which was subsequently joined by the EU and Canada.

Little under a year later, in February, the US took China to the WTO in a complaint over industrial subsidies. And in an unprecedented decision late last month, Washington announced penalty tariffs on China to offset government subsidies for a paper product.

China warned that the latest US move was ill-informed and would damage trade relations between the two countries.

"China feels regret and is strongly dissatisfied [with the US decision]," Chinese Commerce Ministry spokesman Wang Xinpei (王新培) said in a statement.

damage

"The move will seriously damage cooperation [on intellectual property rights protection] that the two parties have already built up and will have a negative impact on trade relations between the two sides," Wang said.

China has issued detailed regulations to fight piracy, but the continuing widespread availability of pirated goods -- from fresh Hollywood blockbusters on DVD to fake Louis Vuitton handbags -- is widely seen as proof that not nearly enough is being done to combat the problem.

Under new rules issues last week, anyone who produces more than 2,500 discs of movies, music or computer software is now regarded a serious offender and can be jailed for seven years.
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