U.S. to Impose Major Trade Sanctions on China : Punitive tariffs: Pirating of American software, copyrights and patents is cited in the move, which could double the price of some imported products.
The Bush Administration announced plans late Tuesday to impose major new trade sanctions on Beijing, threatening to boost tariffs on about $1.5 billion in Chinese exports to this country in retaliation for China’s pirating of American software, copyrights and patents.
The action could cause the prices of some Chinese products sold in this country to double. U.S. Trade Representative Carla Anderson Hills said Washington will publish a list today of Chinese goods that may be subject to new punitive tariffs. China’s principal exports to this country include clothes, toys and shoes.
The move is the strongest action the United States has taken so far in its efforts to protect intellectual property rights, which include the copyrights to American films and books, the patents for drugs and chemicals, and the trademarks of brand-name products.
Last spring, the Administration listed China, India and Thailand as the three leading violators of American intellectual property rights, and Hills said at the time that “first place goes to China for worst conduct.” The United States is continuing talks with India and Thailand but decided Tuesday to move forward toward punitive sanctions against China.
Only 10 days ago, during his visit to Beijing, Secretary of State James A. Baker III had held out the prospect that the intellectual property dispute might be settled in a new round of talks in Washington. But Hills indicated Tuesday night that the efforts to reach a compromise had failed.
“I am disappointed that these negotiations have not produced a resolution,” Hills said in a statement. “China’s proposals were ultimately insufficient.”
An industry trade group called the International Intellectual Property Alliance estimated that U.S. copyright holders lost more than $400 million in 1988 through China’s pirating of copyrighted American goods. The biggest single loser was the American computer software industry, it said.
In addition, the Pharmaceutical Manufacturers Assn. estimated that U.S. drug manufacturers have lost more than $200 million a year because of China’s pirating of patented American drug products.
Under a 1988 trade law, the U.S. trade representative’s office is now required to publish a list of Chinese goods that may be subject to punitive tariffs. American organizations, such as private companies, trade groups and consumer groups, will have 30 days to object to inclusion of any of the items on the list. American toy manufacturers, for example, might try to oppose the imposition of tariffs on Chinese-made toys.
After the 30 days, it will be up to the Administration to decide what sort of tariffs to impose. Hills noted that negotiations with China could continue during the 30-day period.
Over the past two years, the U.S. trade deficit with China has soared. U.S. officials estimate that the deficit with China will exceed $12 billion this year, larger than the U.S. imbalance with any other country except Japan,
The intellectual property case is the second major trade action the Administration has lodged against China in the past two months.
On Oct. 11, the Administration moved to counteract Chinese rules and practices that restrict American exports to China. In that case, U.S. officials will formally investigate the Chinese trade practices over the next year, after which they could impose other retaliatory tariffs against China’s exports to the United States.
At the end of Baker’s visit to Beijing, the secretary of state said China had made some “positive” proposals aimed at solving the dispute over intellectual property. But over the past week, U.S. and Chinese negotiators failed to work out differences over such issues as the legal definition of computer software.
“They have not showed as much flexibility as we thought,” said one Administration official involved in the talks. “There is a plenum (a meeting of the Central Committee of the Chinese Communist Party) taking place in Beijing right now. The Chinese negotiating team here seems to be having difficulties getting instructions from their ministers at home.”
In recent months, as the Nov. 26 deadline approached, the Chinese regime took several actions aimed at heading off U.S. retaliation.
China said it was willing to join the Bern Convention, the international agreement governing intellectual property. But it did not say whether it would enact and enforce new legal protections inside China, and a U.S. source said that one of the unresolved differences was over whether China would revise its domestic laws.
