Why Trade Disputes Will Continue to Flare
The recent agreement settling an “intellectual property” dispute between China and the United States was a perfect example of Mandarin-style diplomacy--both sides saved “face” yet achieved little in reality. China promised to start a six-month “special period” to enforce its copyright law, while the United States agreed not to impose sanctions on Chinese exports.
But though the “pirate plants” in South China are now closed down, they may reappear in other parts of the country six months later. In addition, the differences between the two countries’ legal systems discourage U.S. companies from settling lawsuits in China. Disney and Microsoft recently won their trademark-infringement cases in a Beijing court. But the actual awards--$91 and $2,600, respectively--hardly brought any comfort to the two companies.
What can be done to solve such a thorny problem? It is everybody’s hope that China can improve its legal system to better protect both domestic and foreign copyrights. But this is unlikely to happen overnight. With China about to enter the post-Deng Xiaoping era, Chinese leaders may have less time to handle the copyright issue.
Even if the Chinese can develop a more effective copyright law, they may not have the means and authority to enforce it throughout China. In the post-Deng era, the central leaders in Beijing will have to be more accommodating toward the desires of various regional bosses simply because they will need their support to survive. Thus, the Clinton Administration may have to search for new ways to deal with trade and other bilateral disputes.
In the short run, selling copyrights to China at a lower price may prove to be a positive step. After all, most U.S. intellectual properties, such as CDs and software, are rarely sold at face value even in the United States. By offering China copyrights at a discount, U.S. companies can better succeed in opening up a market for their legitimate products and reducing piracy in China.
The White House may also need to design a trade policy based on what Nicholas Rockefeller of the Rockefeller International Group calls “rifle shots.” Under such a policy, the United States would impose higher tariffs only on products from those Chinese provinces that make the counterfeits. Unlike human rights, piracy of intellectual properties is largely a regional problem, because the majority of the pirate plants are located in China’s coastal provinces. So selective sanctions might be a more effective way to deter violation of copyrights in China.
In addition, a rifle-shot policy would spare China’s poor inland regions, which badly need overseas markets to develop. There is no reason for them to be stifled economically because of the wrongdoing of their rich coastal cousins.
The same approach could also be applied to illegal immigration from China. Investigations conducted by both the U.S. and Chinese governments indicate that the overwhelming majority of Chinese “boat people” came from Fujian, a province on the southern coast of China. Since this region is far from Beijing, the central government may have little control of the situation there. By directly dealing with Fujian, the White House might find it easier to curb illegal immigration.
In the long run, the Administration may have to redefine its overall China policy. For one thing, in the post-Cold War era, trade and immigration, rather than ideology, will carry more weight. The fact that soon there will no longer be any powerful leaders to rule China also poses additional challenges to America’s China policy, because after Deng, regional bosses may tend to act on their own rather than sing in tune with the central government in Beijing.
Therefore, the United States should set up more consulate offices in China to open channels for direct dialogue with local leaders. (Currently, there are only four U.S. consulates in the entire country). American companies also need to establish joint ventures in China’s inland provinces, as well as in its coastal regions. Although these ventures may not be initially profitable, they will surely help expand markets for U.S. products.
A “decentralized” China requires that the United States find new ways to resolve bilateral disputes rather than rely on “business-as-usual” diplomacy.
