Copyright tiff strains Sino-U.S. trade


BEIJING -- The United States is threatening to impose steep tariffs on imports of some Chinese goods if China does not quickly stop the widespread piracy here of U.S.-copyrighted computer software, pharmaceuticals and chemical products.

Joseph Massey, an assistant U.S. trade representative, said in Beijing yesterday that he has given Chinese officials an April 15 deadline to show how they will protect such intellectual property rights from unlicensed use.

Mr. Massey said the U.S. trade representative's office must decide by the end of April whether to start a formal investigation of China's efforts to protect foreign copyrights, which he characterized as "lax."

Under the 1988 U.S. Trade Act, that investigation could lead to a decision to impose new U.S. tariffs on some Chinese-made goods, he said. The tariffs would raise the prices of the Chinese goods so much that they would no longer be competitive in the U.S. market, he said.

The unlicensed reproduction of all sorts of foreign-copyrighted material -- particularly computer software -- is rife in China, according to both Western and Chinese assessments.

As a developing country short of cash and sorely in need of Western technology, some Chinese argue that China should be not held to the same strict copyright standards as developed nations.

A U.S. computer-industry organization has estimated that the industry loses $400 million annually to Chinese piracy of its products, Mr. Massey said. He could not provide estimated losses from unlicensed use of U.S. formulas for pharmaceuticals and chemical goods but indicated they also were sizable.

In recent months, various Chinese publications have acknowledged the problem and have said that it might be addressed by China's first copyright laws, which go into effect in June. China also has indicated that it hopes to join one of two international copyright conventions in the next few years.

But after two days of talks in Beijing with Chinese officials, Mr. Massey said he remains uncertain whether China will implement its new copyright regulations in a way that will protect foreign properties sufficiently.

"If the problem doesn't get fixed," he said, "we're going to have take some action."

The dispute over intellectual property rights is just one of what Mr. Massey called "a number of bumps and carbuncles" in the Sino-American trade relationship these days -- trade frictions likely to affect the upcoming congressional debate

on renewal of China's most-favorable-nation trading status with the United States.

Foremost among the problems is China's rapidly growing trade surplus with the United States, which last year totaled $10.4 billion, about 70 percent more than in 1989. The U.S. trade deficit with China is expected to be second only to its deficit with Japan before long.

U.S. imports of Chinese goods grew almost 27 percent last year, making the United States China's largest foreign market.

At the same time, U.S. exports to China fell more than 17 percent -- the result, U.S. officials claim, of Chinese efforts to close their markets to U.S. goods.

The United States also recently alleged that China has been illegally sidestepping U.S. import quotas on garments and textiles by exporting those goods through other countries or with false labels as to their nation of origin.

Some garments leave Chinese factories, for example, with labels that say "Made in Taiwan," U.S. officials claim.

China originally threatened to retaliate in response to that allegation, but yesterday it unexpectedly announced a new crackdown on Chinese exporters that engage in such practices, saying they would have their products confiscated and their export rights revoked.

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