The War Is Off, for Now

The United States and China have edged back from a full-scale trade war by reaching a new agreement on preventing the theft of American intellectual properties--software, CDs, CD-ROMs, videodiscs and similar products. Under the accord, Beijing will continue its recent crackdown on the flagrant rip-offs. For now, acting U.S. Trade Representative Charlene Barshefsky has withdrawn the threat of sanctions against $2 billion in Chinese exports to the United States.

But the United States should not have to stand alone in monitoring Beijing’s efforts against counterfeiters. It should have help from the international community. Our other trade partners, especially in Europe, should apply more pressure and exercise greater vigilance to resolve the problem. Until now, they have let the United States push ahead alone, and some have been quick to criticize Washington for threatening unilateral sanctions that might sour trade with China in general. This despite the fact that Beijing cannot be held accountable in other ways since it is not a member of the World Trade Organization.

The new U.S.-Sino pact broke little ground past the 1995 agreement in which Beijing committed to broad efforts to protect copyrighted material. What’s different this time is the number of specific measures set forth.

About half of China’s 30 CD and CD-ROM pirate factories have been closed under U.S. pressure. They have either lost their business licenses or permits to export. Their manufacturing molds have been broken or confiscated. The now-closed factories had produced 30 million to 50 million illegal CD or CD-ROM units per year. U.S. industry sources say the total capacity for making illegal CD, CD-ROM and videodisc units runs much higher and that stolen intellectual property has been a lucrative business for China. Taiwan and Hong Kong also are players in the problem in that investors there have backed the Chinese factories.

Beyond calling for continued scrutiny of the outlaw factories, the agreement bans the importation of any new presses to manufacture CDs, CD-ROMs and other intellectual property products.

The United States has made clear that Chinese enforcement of copyrights remains a condition for entry into the WTO. Beijing wants to join the organization but so far has been unwilling to pay the price necessary to do so--conforming its business and legal practices to world standards. America’s trade allies say they agree with the U.S. position, but they have been woefully timid in making Beijing understand this. We are, after all, talking about the world’s most populous market.