IFPI Welcomes US Action Against China

by Glen Shapiro, LawAndTax-News.com, New York

13 April 2007

The International Federation for the Phonographic Industry (IFPI) has welcomed the US decision to take action against China under the auspices of the World Trade Organisation, over the country's failure to adequately protect intellectual property.

US Trade Representative Susan C. Schwab earlier this week announced that the United States would make two requests for World Trade Organization (WTO) dispute settlement consultations with the People’s Republic of China: one over deficiencies in China’s legal regime for protecting and enforcing copyrights and trademarks on a wide range of products, and the other over China’s barriers to trade in books, music, videos and movies.

"Piracy and counterfeiting levels in China remain unacceptably high,” Ambassador Schwab explained, continuing:

“Inadequate protection of intellectual property rights in China costs US firms and workers billions of dollars each year, and in the case of many products, it also poses a serious risk of harm to consumers in China, the United States and around the world. We acknowledge that China’s leadership has made the protection of intellectual property rights a priority and has taken active steps to improve IPR protection and enforcement."

"However, while the United States and China have been able to work cooperatively and pragmatically on a range of IPR issues, and China has taken numerous steps to improve its protection and enforcement of intellectual property rights, we have not been able to agree on several important changes to China’s legal regime that we believe are required by China’s WTO commitments."

"Because bilateral dialogue has not resolved our concerns, we are taking the next step by requesting WTO consultations. We will continue to welcome dialogue with China in an effort to resolve these issues. We also look forward to continuing fruitful bilateral discussions with China on other important IPR matters we have been working on together, since achieving comprehensive IPR protection requires concerted efforts on many fronts. Ultimately, it is in the best interest of all nations, including China, to protect intellectual property rights.”

The US Trade Representative added:

“In the same vein, we have discussed with China in detail the harm to US industries, authors and artists who produce books, journals, movies, videos, and music caused by limiting the importation of these products to Chinese state-owned entities, and the problems caused by Chinese laws that hobble the distribution of foreign home entertainment products and publications within China. These products are favorite targets for IPR pirates, and the legal obstacles standing between these legitimate products and the consumers in China give IPR pirates the upper hand in the Chinese market.”

“As we continue to have an open dialogue with China in an effort to resolve these particular issues with the help of the WTO dispute resolution mechanisms, we will of course also continue to put serious efforts into our joint work with China on innovation policy, intellectual property protection strategies, and the range of other important matters in our bilateral economic relationship through the U.S. – China Strategic Economic Dialogue and the Joint Commission on Commerce and Trade.”

The USTR announcement came despite the decision this week by the Chinese Supreme People's Court to reduce the threshhold levels for music and movie piracy, effective immediately.

In future, anyone possessing more than 500 pirated DVDs or CDs (down from 1,000) will face criminal prosecution with gaol terms of up to three years, instead of fines, while possession of more than 2,500 pirated items (down from 5,000) will triggers more severe penalties of up to seven years in prison.

In a statement published following the announcement of the WTO action, John Kennedy, Chairman and CEO of IFPI revealed that:

"The international recording industry fully supports the US government's decision to initiate a WTO dispute against China. China is a hugely exciting potential market for record companies, but it is also the source of the world's biggest piracy problem. Record companies are eager to invest there, to develop local artists internationally, to bring international music to Chinese audiences and to stimulate economic partnership with Chinese industries. This is impossible until China does more to improve the legal landscape on which the music industry depends to do its business."

He continued:

"We recognize that China has made efforts in recent years to step up copyright enforcement. However, to achieve durable and meaningful improvement and to bring China into line with international rules, certain legal reforms and changes to enforcement practices are needed. These reforms, which affect the basis on which criminal prosecutions can be brought in China, would help remove key obstacles that currently hinder enforcement against pirate operators. We hope that the proceedings announced by the USTR today will lead to these required improvements, from which copyright-based industries internationally, including in China, stand to benefit."

The Chinese authorities have responded angrily to the US decision to bring them before the global trade body, according to reports in the international media this week.

Speaking to the Financial Times on Wednesday, a spokesman for the Chinese Commerce Ministry suggested that the move went "against the consensus reached between the two countries' leaders on developing bilateral trade relations and properly handling trade problems".

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