Punishing a Pirate

The United States, concluding that China has failed to honor last year’s agreement to prevent the piracy of American intellectual property, Wednesday will announce trade penalties that could cost Beijing billions of dollars. On its part, China has signaled a readiness to retaliate, hinting it might halt purchases of Boeing aircraft and withhold permission for General Motors Corp. to build cars in Shanghai. Such stern threats and counter-threats are becoming a well-traveled road in U.S.-China relations. Usually they serve as a prelude to working out face-saving concessions on both sides. This time around, that might not be easy.

Over the weekend customs officials in Hong Kong seized 60,000 pirated copies of CDs and CD-ROMs that had been smuggled in from China. The magnitude of the seizure suggests just how ineffectual last year’s agreement has been in curtailing the theft and copying of software, compact disks and other products with intellectual property value. From time to time China has made a show of destroying confiscated pirated material, but factories in a number of cities continue to pour out illicit copies that have cost American copyright holders enormous sums. U.S. officials say some of these factories are controlled by the families of high Communist Party or military leaders.

China’s failure to honor the intellectual property agreement is one reason among several why it is making little progress in its bid to join the World Trade Organization. The WTO requires playing by recognized rules of trade behavior. Washington, with the European Union nodding approval, regards the copyright issue as a test of China’s intentions. Curiously, China seems to make no connection between its tolerance of intellectual property theft and its international credibility.

Sometimes, for reasons of state that might on occasion be pretty murky, governments choose not to make an issue out of another country’s violations of international understandings, as Washington has just done in deciding not to punish China for selling prohibited nuclear equipment to Pakistan. But China’s continued stealing of American intellectual property has simply become too big and too flagrant to ignore. Action is needed, and now is the time.