Gutierrez warns China to act against piracy


BEIJING - Secretary of Commerce Carlos Gutierrez warned yesterday that without solid enforcement of patents and trademark rights in China, trade tensions with the United States would increase. But a group of Chinese business students he met with here seemed to have only one thing on their minds: textile quotas.

At the start of a three-day visit to Beijing, Gutierrez took a tough line on intellectual property protection. In a roundtable discussion with graduate business students at Qinghua University, he said the time for negotiations on China's lax enforcement of copyrights and patents had ended. "Promises in principle eventually need to lead to results," he said, "and we believe it is about that time."

But the students pressed the subject of textiles and the recent U.S. decision to impose new quotas on Chinese clothing after a more comprehensive system of global quotas expired at the beginning of the year.

'10 years to prepare'

"We have already given them 10 years to prepare," said Ding Zheng, a textile company manager and business student who attended the meeting. He referred to the long period that American textile makers had to get ready for the end of quota system and an inevitable rise in Chinese exports. "I think it's their fault," Ding said.

"Maybe you're right; they should have prepared themselves," Gutierrez replied. "But we're only dealing with the fact that the market was disrupted."

With the end of the global quotas, Chinese exports of shorts, trousers, underwear and other garments have surged. Exports of cotton trousers to the United States rose 1,500 percent in the first months of the year.

Under an agreement that China signed on joining the World Trade Organization in 2001, a provision allows for "special safeguards" against Chinese exports when they cause "market disruption."

The new U.S. quotas allow 7.5 percent growth in Chinese textile exports to the United States.

"In this case, there was a market disruption," Gutierrez said, "and that's very hard to explain to the textile person in China who lost his or her job, and I know that."

He denied that the new quotas are protectionist, calling them a temporary step while the U.S. textile industry "finds new ways of competing."

The growing dispute over textile exports is one of several contentious subjects dogging trade relations between the two countries. Gutierrez did not bring up the matter of China's fixed-rate currency, though it is a point of strong contention. Washington has accused Beijing of holding down the value of its currency, the yuan - which has traded at about 8.28 to the dollar for the last decade - enabling a flood of cheap Chinese exports. Some in Congress have proposed legislation to punish China if it does not revalue the currency.

$60 billion a year

American, European and Japanese companies and industry groups complain as well that Chinese officials do little to enforce the many intellectual property laws on their books, and industry groups in the United States have pressed the Bush administration to consider filing suit at the WTO unless enforcement improves. In April, William H. Lash III, an assistant secretary of commerce, estimated that Chinese violations of intellectual property cost international companies more than $60 billion a year.

During his visit to Beijing, Gutierrez will meet with top Chinese economic officials, including Bo Xilai, the commerce minister, and Wu Yi, deputy prime minister in charge of trade negotiations.

At the meeting with the students, Gutierrez said that the new quotas would have little effect on the total trade between the two countries. "The safeguards are not going to reduce our trade deficit," he said, adding that the American deficit with China reached $162 billion last year.

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