Another two cases against China? WSJ

U.S. Piracy Case May Raise
Trade Tensions With China
By NEIL KING JR.
April 7, 2007; Page A3

WASHINGTON -- The Bush administration is preparing to take its
longstanding spat with China over pirated movies, music and books to
the World Trade Organization, a move that could notch up trade
tensions between the two countries.

The administration this coming week will file twin cases challenging
China's lax enforcement of its own antipiracy laws as well as its
tight restrictions on the distribution of foreign movies, music and
printed material. The antipiracy complaints will mark the culmination
of several years of work within the administration to build a case
against China over alleged intellectual-property abuses, which hit
U.S. exports ranging from auto parts to scientific journals.

While supported by the U.S. movie and music businesses, the impending
complaints have stirred unease among executives of other U.S.
industries, including drug companies and high-tech manufacturers. Many
fear that a clash with China over piracy could undermine the
increasing cooperation they have won over the past year with local
Chinese officials on combating the problem.

Industry groups that aren't expected to support the case include the
Business Software Alliance, whose members include Microsoft Corp. and
Apple Inc., and the Pharmaceutical Research and Manufacturers of
America, the drug industry's main trade group. Both sectors have made
their own market-access and antipiracy advances and don't want to see
that work disturbed, administration and industry officials said.

The cases will add to a list of U.S. trade actions against China in
recent months. The administration in February filed a WTO case
alleging that Beijing doled out unfair subsidies to a range of Chinese
industries, while last month the Commerce Department broke decades of
precedent by opening the way for U.S. companies to seek higher tariffs
on some Chinese paper imports found to have benefited from government
subsidies.

The first case being filed this coming week will make a number of
specific complaints against China's enforcement of its own piracy
laws. Current Chinese law says that in the case of counterfeit CDs,
for instance, one must be caught with at least 500 to be charged with
a crime. The U.S. will argue that there should be no such threshold.

The case will also argue that it should be illegal to either
distribute or produce counterfeit goods. Chinese law requires one to
be caught doing both before being charged.

"This case is going to be very technical, very targeted and very
specific," said one industry official with knowledge of the
administration's case.

The other complaint will target what the U.S. alleges to be overly
restrictive rules on the distribution of foreign CDs, DVDs, books and
other media products. The case won't seek to overturn the limit placed
by Beijing on foreign films that are allowed to show in Chinese
theaters, which is now set at 20 films a year.

The cases come as China has taken a number of moves recently to crack
down on piracy, increasing penalties and lowering the thresholds for
what constitutes a criminal act. Chinese provincial authorities have
worked alongside U.S. industries to carry out a series of raids
against factories and warehouses trafficking in counterfeit goods.