U.S. Threatens China With Trade Sanctions : Piracy: Planned punitive tariffs, to be announced today, follow unresolved dispute over intellectual property theft.

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Dec. 31, 1994 12 AM PT

Associated Press

WASHINGTON —

Unable to resolve a dispute with China over intellectual property theft that targets American computer software, movies and tapes, the United States is preparing a list of punitive tariffs the Chinese warn could spark a trade war.

Sources close to the negotiations said Friday the threatened trade sanctions will target more than $1 billion in Chinese products. The goal is to force the Chinese to halt what U.S. officials say are abuses that cost U.S. companies $800 million annually in patent and copyright piracy.

A formal announcement of the proposed sanctions will be made today by U.S. Trade Representative Mickey Kantor, according to the sources, who spoke on condition that their names not be used.

In Beijing, Chinese officials were taking a tough line as well, saying they have increased efforts to halt abuses of copyright and patent protections. They warned that if the United States carries through with its threat, the Chinese government would retaliate against American products.

“To threaten trade retaliation will not solve the problem and will do no good . . . to the talks,” Foreign Ministry spokesman Shen Guofang said.

One U.S. source said the Chinese products that would be targeted would cover all the Chinese imports most popular in the United States--textiles, clothing, toys and electronics.

America’s trade deficit with China was certain to set another record this year, running at an annual rate of $29.5 billion through October. That puts China’s surplus second only to Japan’s, which was running at an annual rate of $64.7 billion for the same period.

Those figures have made Japan and China chief targets of U.S. efforts to knock down foreign barriers and narrow the trade gap.

The prospects for the Chinese trade negotiations do not appear promising. But if the dispute follows the pattern of past trade fights with China, a deal could be reached before the sanctions begin.