China Trade Truth: Copyrights, Human Rights Can’t Be Separated
Ruthlessly exploit slave labor to boost your multibillion-dollar trade surplus and you’ll provoke America’s moral outrage. But if you dare to export illicit copies of Microsoft Windows or “The Lion King” throughout Asia you’ve crossed the line, Buster. Human rights violations may not justify a billion dollars’ worth of punitive tariffs and risking a trade war with China, but copyright violations do.
The Clinton Administration’s proposed crackdown on China’s state-sanctioned piracy of American movies, CDs and software offers more than a case study in human rights hypocrisy. It fortuitously trips over a vital truth of the Information Age. No, not the increased risk of intellectual property parasitism as digital technologies go global--although that’s what Hollywood and the creative community understandably want people to think. Rather, it shows how proliferating digital technologies will force this country to reconsider the way it does business with others.
In that context, shutting down the intellectual property pirates simply misses the point.
To be sure, China’s shameless practice of copycatting around is disgraceful. By patching together castoff technologies and ripping off American’s pop media, the world’s biggest country is rapidly transforming itself into the world’s largest multimedia counterfeiter. If it’s on floppy disc, CD, CD-ROM or laser disc, chances are it’s being copied somewhere in China and being black-marketed cheap in Asia. U.S. trade officials estimate that China exports perhaps 70 million CDs and laser discs a year from 29 factories in the central and southern parts of the country. Most of them have some link with either government or state-owned institutions.
Even worse, the number of these CD copycat plants has nearly doubled in the two years since China and the United States signed an anti-piracy pact. The agreement simply hasn’t been enforced. Investigators discovered Chinese-made laser disc copies of Disney’s “The Lion King” being shipped in Asia before the legitimate disc was pressed. Sales of honest CDs in Hong Kong dropped almost 25% last year. America’s pop culture moguls estimate they are losing more than $1 billion a year to China’s entrepreneurial counterfeiters.
Some trade experts and media mavens insist that the central issue here is market access: If only China would let legitimate foreign businesses participate in its market, that would put pressure on the counterfeiters. Unfortunately, that’s wishful nonsense. Just ask the folks at McDonald’s who saw their 20-year lease in a prime Beijing location revoked in favor of a company with better guangxi --that is, connections.
What the current copycat crisis reaffirms is the fundamental truth that property rights--especially intellectual property rights--mean absolutely nothing without a legal system that fairly enumerates and enforces them. China, of course, insists that America’s complaints about lack of enforcement constitute an outrageous intrusion into its domestic affairs--a familiar objection from Beijing in the years since Tien An Man Square.
What America’s media moguls should have the courage to say is that there is virtually no way to have a legal system that respects property rights and simultaneously ignores the civil rights of individuals. In truth, the challenge foreign businesses in China face has little to do with human rights and everything to do with the rule of law. American business looks foolish, inconsistent and hypocritical when it insists that China selectively enforce its own laws. It is sickening to watch American companies sit quietly when people are arrested for owning a copy of “1984,” then squeal for trade sanctions if anyone tries to sell a bootleg copy.
But just as digital technologies have blurred the boundaries between conventional media, they have been blurring the lines between criminal and commercial law. This is just as true today for multimedia America as it is for copycatting China. Any lawyer negotiating contracts in cyberspace will confirm this. Fitting today’s copyright laws into tomorrow’s media formats is proving to be extraordinarily difficult. The courts, Congress and the Administration are all struggling with which intellectual property protection regimes make sense.
What does “fair use” mean in the context of the Internet? Is someone a criminal for sending copyrighted material via e-mail? Does software deserve patent protection or copyright protection? Is digitally “sampling” a hit song, dramatically remixing it and then selling it--with credit but no payment--a crime? When does a graphic user interface that is similar to another teeter into copyright infringement?
These are all extraordinarily difficult questions. Billions of dollars rest on the answers. But the reality that reasonable people disagree doesn’t mean that they are destined to be copyright criminals. Fortunately, we have a Constitution, a legal system and a rich history of case law that respects the balance of intellectual property and individual rights. What’s more, American commerce has a tradition of innovation more than slavish imitation.
China, of course, has neither. Why should we be surprised to find widespread piracy in a country that has little respect for intellectual property? Remember, even India--a country that had a flourishing black market in pirated media--has seen a decline in counterfeiting as its own film and software industries have developed. Japan rose to become an economic superpower through strategic copying of others’ innovations, but Japanese industry has grown to appreciate the importance of patents and copyrights. Just ask Sony and Matsushita, which also own movie studios, and Hitachi and Toshiba, who are among the leading filers for American patents.
Today, all the economic incentives in China dictate that piracy is a business model that makes sense. The best way to change that is to help China and its entrepreneurs develop their own intellectual property industries, protected by intellectual property laws that make sense. Does that mean that China will have to reform its judicial system and conform to international standards? Absolutely! There is no way to build an indigenous creative industry without doing so. It is in America’s best interest to assist China in this transformation. That can be done only if America’s multimedia mavens bray less about profits lost to piracy and speak up more often about the opportunities to be gained by respecting the rule of law.
Michael Schrage is a writer, consultant and research associate at the Massachusetts Institute of Technology. He writes this column independently for The Times. He can be reached at schrage@latimes.com by electronic mail via the Internet.
