U.S., China Negotiate on Trade Past Deadline

U.S. and Chinese trade officials negotiated past a U.S.-imposed deadline to resolve differences over copyright piracy issues today, keeping hopes alive that a settlement would be reached before punitive sanctions are imposed by both sides.

The Clinton administration had set a deadline of 9 p.m. Sunday PDT for China to show “positive steps” in halting the rampant abuse of copyright and trademark infringement by Chinese manufacturers.

Acting U.S. Trade Representative Charlene Barshefsky insisted that the deadline remained intact but continued to meet with her Chinese counterparts here in the Chinese capital until shortly after noon today, when talks broke off. The official New China News Agency said the talks would resume later.

The news agency, quoting a “reliable source,” had said shortly after the deadline passed that an agreement was likely by the end of the day.

A U.S. official said that Barshefsky would remain in negotiations as long as the talks were “on a productive track toward closure.” But the official said the senior U.S. trade official would not extend the meetings beyond tonight.

“The fact they are still meeting is a positive sign,” the official said, “but at this point this thing really could go either way.”

“We are pressing up against the deadline, and the deadline will not be extended,” Barshefsky had said earlier as she left her hotel for the round of talks with Chinese officials this morning.

But even as the deadline passed, officials were still hoping for a settlement to the trade dispute centered on pirated films, music and computer software manufactured at 13 Chinese plants identified by U.S. officials. American entertainment and software company representatives claim the pirated goods cost them $2.3 billion a year in lost revenue.

In a replay of a similar trade skirmish last year, the U.S. threatened punitive sanctions against targeted products, including textiles, if China’s government does not take concrete steps to halt the rampant piracy.

China countered with an even more severe list of sanctions against the U.S. that includes the cancellation of existing contracts with American companies. In a new twist this year, China moved to isolate the American leadership on copyright issues by promising more business to Japan and Europe if the Clinton administration goes through with its threatened sanctions.

The last-ditch negotiations to resolve the dispute took place during one of the lowest points in U.S.-China relations in many years, with the two countries at odds on issues ranging from nuclear proliferation to claims that the U.S. has illegally exported garbage to China’s shores.

Barshefsky arrived in Beijing on Friday to participate in negotiations with Vice Foreign Trade Minister Shi Guangshen.

Despite the deadline, as a practical matter it would take weeks, if not months, before the effects of the threatened sanctions would be felt by either country. For one thing, the sanctions would not affect goods already in transit.

Even if the talks broke down and sanctions were announced, trade negotiators would still have time to patch up their differences and break the deadlock.

In the week leading up to the deadline, China unveiled a series of actions it claimed to have taken against copyright pirates. Television news programs showed uniformed police officers setting fire to stacks of pirated music CDs. One report showed police driving over the discs with a steamroller.

China also claimed to have closed six factories, revoked the licenses of two CD plants and halted export shipments.

A similar flurry of activity occurred before the last round of copyright piracy talks in March 1995. The U.S. claim that China has not lived up to the promises contained in the 1995 accord is what prompted the new round of talks and threats of sanctions.

However, once Barshefsky arrived, the Chinese side seemed to sense victory, apparently presuming that a senior U.S. official would not travel to Beijing unless a settlement was imminent.

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U.S. officials had hoped to conclude the talks Saturday. But on Sunday morning Barshefsky announced tersely that “substantial additional progress is going to have to be made.”

Before entering the afternoon talks, Barshefsky said: “We are still working on it.”

The main sticking point appeared to be U.S. demands that China open up its market to permit U.S. companies to form joint ventures in China to manufacture music recordings, films and books.

This demand is sensitive in China, where the government jealously guards its control of information and the arts.