U.S., China Nearer to Settling Trade Flap : Commerce: Talks focus on measures such as task forces to protect American intellectual property.

Chinese and U.S. negotiators edged closer this weekend to settling a dispute over copyright and intellectual property issues that has threatened to engage the two countries in a bitter trade war.

In a significant advance, the U.S. Embassy in Beijing said Saturday that the two sides were talking about specific measures to increase enforcement of copyright and trademark laws.

The measures include the establishment of task forces that would protect intellectual property inside China; initiation of a special enforcement period, and increased protection for audiovisual products and computer software.

As the negotiations continued today, the official New China News Agency quoted a Ministry of Foreign Trade and Economic Cooperation official as saying progress had been made but gave no details. The talks will resume in Beijing next week, the agency said.

U.S. trade officials have said that enforcement is key if China is to meet U.S. conditions necessary to avoid punitive 100% tariffs on more than $1 billion in Chinese imports. China has threatened retaliatory tariffs on U.S. products.

Although China has strict laws protecting intellectual property, they are widely flouted. Counterfeit copies of American compact discs are sold on street corners near the U.S. Embassy here. Pirated laser video discs and computer software are sometimes available before they reach the U.S. market.

In a clear attempt to convince U.S. negotiators of its newfound resolve to crack down on the copyright pirates, the Chinese government conducted high-profile raids on a factory in Guangdong province and on Beijing’s main computer district last week, seizing CDs and computer floppy disks by the tens of thousands.

At the same time, Beijing warned Washington that the United States stands to lose more than $2 billion in airplane orders if the two sides fail to reach a settlement by the Feb. 26 deadline set by U.S. Trade Representative Mickey Kantor.

The official China Daily newspaper reported Friday that China Southern Airlines will cancel a new order for Boeing 777 aircraft and turn to the European supplier Airbus if the trade sanctions take effect.

“The trade war will benefit neither side,” said Ding Yuhua, general manager of the airline’s Import & Export Trading Corp.

According to Ding, new trade sanctions would not affect a 1993 contract, worth more than $1 billion, for six Boeing 777s.

However, China Southern had planned to place orders worth more than $2 billion in the next few years, Ding said. “We might have to turn to other European models instead,” he said.

Meanwhile, the Concord Department Store in Beijing, which had stocked pirated laser video discs of American movies throughout the trade negotiations, began removing them from its shelves last week.

James Bond movies and Bruce Willis’ “Die Hard” films were among the discs replaced by Chinese patriotic laser discs.