Forcing the Issue on Intellectual Piracy : Beijing must answer for China’s failure to end counterfeiting
Despite China’s agreement last spring to crack down on the wide-scale and costly theft of American software, CDs and the like--so-called intellectual property--U.S. officials say the piracy not only continues but is growing, with counterfeiting of compact discs alone having doubled in the last six months.
A formal review of the agreement by the two governments is now under way in Beijing, but even before its conclusion the Clinton Administration is letting it be known that “very strong action” is likely unless China quickly demonstrates that it is taking its obligations seriously. Earlier this year, after months of frustrating negotiations, Washington threatened to slap tariffs of more than $1 billion on Chinese imports unless Beijing acted to curb the rampant counterfeiting of American-owned computer software, films, books and CDs. That dollar figure represented the estimated annual losses to U.S. firms resulting from the illicit copying of these products. Now the same warning is again being implicitly raised. Given the losses suffered by U.S. businesses, concerns over the steadily swelling American trade deficit with China and the distinctly chilly attitude Congress has taken toward Beijing, the Chinese would be foolish to disregard that threat.
PROBLEM: A major problem in trying to get China to crack down on the theft of intellectual property is that the Chinese government itself is known to be a major user of the stolen goods. “No ministry,” says Bob Lu, Microsoft’s marketing manager in China, “has been buying software totally legally. Some are using no legal software at all.”
Moreover, U.S. officials note, a number of high Communist Party and government functionaries are known to have a personal financial stake in some of the factories that are producing pirated materials. China talks about the thousands of legal actions it has taken against distributors and vendors of counterfeit products. But thanks to the political protection they enjoy, manufacturing plants have escaped largely unscathed.
China’s failure to enforce the anti-piracy agreement represents only the most recent addition to a disturbingly lengthy list of issues that vex its relations with the United States. But the dispute touches far more than immediate bilateral ties. Beijing is eager to join the new World Trade Organization, and by most economic yardsticks it is clearly qualified for membership. With $200 billion or more in annual global trade, China is the world’s 11th-largest trading nation. Its economy is expanding and modernizing at a remarkable pace, and its future prospects look bright. What then keeps China from being welcomed into the WTO? Chiefly its insistence on playing by its own rules when that suits its purposes, a behaviorial habit that, as Robert Manning, a former State Department adviser on Asia policy wrote in The Times earlier this year, casts a long shadow over “China’s reliability and predictability as an economic partner.”
COMMITMENTS: Reliability and predictability are not virtues to be adopted and then dropped as whim dictates. The international trading system runs on trust, on the assumption that a nation will respect and abide by the commitments it has made. With each demonstration that it finds such commitments more of an annoyance than a mandate--as in the intellectual piracy matter--China raises fresh questions about its readiness to participate as a full partner in the global trading system.
Sanctions of the kind that Washington now says may be necessary can be economically messy and politically difficult. But there are times when no alternative is possible if the rules of relations between states are to mean anything. China has made an agreement to protect U.S. intellectual property rights. If it fails to honor that agreement, it will be all but impossible for Washington not to take punitive measures.
