WTO launches probe of piracy in China

geneva -- The World Trade Organization opened a formal investigation Tuesday into allegations that China was providing a haven for product piracy and counterfeiting, the most far-reaching of four current trade disputes between Washington and Beijing.

The U.S. complaint over China’s enforcement of intellectual property rights is the culmination of years of agitation in Washington and elsewhere over one of the world’s biggest sources of illegally copied goods, including DVDs, CDs, designer clothes, sporting goods and medications.

“The United States recognizes that China has made the protection of intellectual property rights a priority and that China has taken active steps to improve . . . protection and enforcement,” U.S. trade official Dan Hunter told the WTO’s dispute settlement body.

But Beijing has not done enough, Hunter said. He added that consultations between the two countries failed to resolve U.S. concerns, making the establishment of a WTO investigative panel necessary.

Beijing heavily criticized Washington this year for starting the case, saying it could damage trade relations between the countries.

The case could have significant ramifications for American industries, including Hollywood and Silicon Valley, in determining how they combat piracy.

Lu Xiankun, a Chinese trade official, said Friday that the U.S. legal action was regrettable and that China would defend its interests before the global commerce body.

China strongly opposes U.S. attempts to impose regulations that go beyond what is required by the WTO, Lu told the WTO’s dispute body.

The WTO panel’s scope will be limited to whether Beijing has taken sufficient action to protect intellectual property rights, but it could ultimately authorize U.S. trade sanctions against China worth billions of dollars annually -- the amount the U.S. claims its companies lose because of China’s lax enforcement. Such a panel often takes years to reach a final decision.

Hunter declined to repeat U.S. accusations of Chinese wrongdoing. Instead, he referred to a statement to the dispute body last month by U.S. trade lawyer Juan Millan, who said product piracy in China remained “unacceptably high.”

“China has set one of its thresholds for prosecution of criminal copyright infringement at 500 infringing copies,” Millan said. “We find it difficult to understand, however, why China has chosen to tie the hands of its prosecutors and prevent its authorities from prosecuting a copyright pirate who is caught with only 499 copies of an infringing product.”

Millan also complained that China refused to criminalize piracy of American movies, music, books and software still being blocked from the Chinese market because of censorship review laws.

The U.S. government has brought a series of complaints to the global commerce body since last year amid pressure from Congress to do something about America’s soaring trade deficits and lost manufacturing jobs, which critics blame in part on unfair trade practices by foreign nations.