W.T.O. Rules Against China’s Limits on Media Imports

W.T.O. Rules Against China’s Limits on Media Imports
By KEITH BRADSHER
Copyright by The New York Times
Published: August 12, 2009
http://www.nytimes.com/2009/08/13/business/global/13trade.html?ref=global-home


HONG KONG — A World Trade Organization panel ruled on Wednesday that China had violated its international free trade rules by limiting imports of books and movies, in a decision that buttresses growing complaints from the United States and Europe about Chinese trade policies.

The W.T.O. decision in Geneva is a victory for the United States at a time when a growing number of business executives and politicians perceive China as becoming increasingly nationalistic in its trade policies.

Ron Kirk, the United States trade representative, praised the panel’s legal finding. “This decision promises to level the playing field for American companies working to distribute high-quality entertainment products in China,” Mr. Kirk said, “so that legitimate American products can get to market and beat out the pirates.”

The Chinese government had no immediate reaction to the decision, which was released late at night Beijing time. Chinese state media also initially ignored the decision. Chinese officials sometimes wait a day or two to respond to adverse trade developments.

Like the United Nations, the W.T.O. has limited power to enforce its decisions. But an adverse decision at the W.T.O. can shame countries, and panel rulings against other countries have frequently become the basis for bilateral or multilateral negotiations that result in policy changes.

China in particular has been an enthusiastic supporter of the W.T.O. since its admittance in 2001, because the group’s free-trade rules have made it hard for other countries to impose anti-dumping and anti-subsidy limits on Chinese exports. But the Chinese government has not removed heavy taxes on imported auto parts that were condemned by another W.T.O. panel in July, 2008.

The Chinese government has taken a series of actions in recent months that have alarmed trade negotiators and other officials in Western capitals.

Economic planners in Beijing have ordered government agencies not to buy imported goods for the country’s nearly $600 billion stimulus program except when no domestically produced goods are available. The government has set high domestic content requirements for the wind and solar power industries, and has rejected bids even by multinationals that erected factories in China to supply the local market.

Chinese security forces have also detained four Rio Tinto employees in Shanghai; they were formally arrested on Wednesday on suspicion of commercial bribery and trade secrets infringement, although more serious charges of theft of state secrets were not brought against them.

The American business community in China has become wary of recent Chinese moves, and welcomed the W.T.O. ruling.

“The W.T.O. decision is a firm step toward common sense,” said Richard Vuylsteke, the president of the American Chamber of Commerce in Hong Kong. “We don’t want to go to the W.T.O. for these decisions, it shouldn’t have to go that far.”

Responding to a petition filed by the United States in earlyApril, 2007, and joined two weeks later by the European Union, the panel urged China to remove its extensive administrative restrictions on the import and distribution of a wide range of books, movies, DVDs and music recordings. So while the United States has been much more vocal on this issue,in many ways this is a victory for the United States and Europe.

Many of these restrictions, like limiting the number of foreign movies that can be shown each year in Chinese theaters, have been aimed partly at limiting foreign influence in China but also at sheltering domestic industries.

However, the panel stopped short of endorsing an American requests for a ruling on whether Chinese censorship has unfairly restricted imports. The panel said that this question was outside its purview; for the same reason, the panel also declined to rule on whether China’s approval processes were too onerous for would-be distributors of imported entertainment.