U.S. Delays Trade Sanctions on China : Diplomacy: Administration gives Beijing 60 days to address piracy of films, music and computer software. Aim is to avoid complicating human rights dispute.


The Clinton Administration backed away Saturday from citing China for pirating American movies, music and computer software after top officials decided in a flurry of meetings and phone calls that launching a new trade action could complicate already touchy relations with Beijing.

“We’re in a very delicate time in terms of our engagement with China,” U.S. Trade Representative Mickey Kantor told reporters.

“My thinking about China was affected by the fact that the period between now and June 3 is critical for the relations between our two countries,” he added, referring to the upcoming deadline on a separate matter: the U.S. renewal of Beijing’s preferential trade status, a decision that will hinge on China’s human rights record.

On the piracy issue, instead of acting now against China, Kantor said, the Administration will give the Beijing government at least 60 days before starting the process of imposing trade sanctions. The announcement came only hours before a midnight Saturday deadline set by Congress for listing countries that have violated U.S. copyright laws.


In addition to China, Kantor identified Argentina and India as leading violators of American copyrights and intellectual property rights. But he delayed action against these two countries too, primarily on grounds that they appear to be making progress in addressing the problem.

The justification for delaying action against China was based not on signs of progress, but on the sensitivity of U.S. relations with the world’s most populous country.

American film, software and music industry trade groups have complained that China’s commercial piracy of their wares costs them hundreds of millions of dollars a year.

U.S. investigators have identified a series of factories in Shenzhen, a Chinese “special economic zone” alongside Hong Kong, that churn out millions of copies of compact discs and laser discs featuring such American stars as Madonna and Whitney Houston. The pirated copies are sold not just in China but in Hong Kong and many other Asian capitals.


Some industry representatives reacted sharply to the Administration’s decision.

China “has made little or no effort to take its immense piracy problem seriously,” said Eric H. Smith, executive director of the International Intellectual Property Alliance, representing the recording and computer software industries. “This is a mere postponement of the inevitable, and we fear it will send the wrong signal--that the U.S. statutory deadlines remain flexible.”

Kantor noted that one objective of the delay is to keep the piracy issue separate from the more fundamental question of whether the United States should renew China’s trade privileges. “We looked at the broader picture,” he said.

Under U.S. law, the President must decide by June 3 whether to extend China’s most-favored-nation (MFN) trade benefits, under which Chinese goods are exported to this country with the same low tariff rates enjoyed by almost all other countries.


Last year, Clinton signed an executive order calling upon China to make “overall significant progress” on human rights issues before its benefits are renewed. China has reacted furiously to the order, saying it will never tailor its domestic policies in response to pressure from another nation.

Kantor also announced a two-month postponement of any U.S. trade action against Japan for discriminating against American medical and telecommunications equipment in its government procurement practices. He cited the current political situation in Tokyo, where Prime Minister Tsutomu Hata is organizing a new government. “Obviously, he (Hata) has been somewhat distracted, as we all know,” Kantor said.

The decision on Japan was not as surprising as the one on China. As late as midmorning Saturday, several U.S. officials believed a decision had already been reached to go ahead with the new piracy action against Beijing. But Kantor later announced that the Administration had decided upon a postponement during a series of morning conference calls among top-level officials.

He said the piracy question had been fully reviewed “at the highest levels” of the Administration. “The President is fully aware of and was obviously involved in the decision,” he said.


The postponement is an indication of how the continuing U.S. dispute with China over human rights issues and MFN benefits is beginning to affect other policy areas.

The Administration is apparently taking extra steps to avoid additional conflicts with China because of the fear that the human rights dispute alone could jeopardize ties with Beijing.

Earlier this spring, the United States ducked an environmental policy conflict with Beijing over the sale in China of rhinoceros horn, a common pharmaceutical and supposed aphrodisiac. In the end, the United States decided to retaliate against Taiwan for selling rhinoceros horn, but not against China.

Asked later to explain the distinction that was made, one U.S. environmental official responded, “1.08 billion people"--a reference to the fact that China has a population of 1.1 billion while Taiwan has only 20 million.


Under U.S. law, the trade representative has the power to cite “priority foreign countries” for violating American copyrights and other intellectual property rights. If this occurs, the United States must launch an immediate investigation and start the process of deciding whether there should be retaliation against that country’s exports to the United States.

U.S. officials have repeatedly complained that China has laws against piracy on the books but is not enforcing them.

Recently, a Chinese vice premier reportedly picked up the phone from Beijing to call authorities in south China’s Guangdong province. Within hours, police in that province staged a series of raids against factories producing pirated goods.