U.S., China Reach Accord on Piracy

U.S. and Chinese officials agreed Wednesday to curtail piracy of American movies, music and computer software, reduce barriers to U.S. technology and make it easier for domestic firms to gain entry to China’s markets.

Bush administration officials said the accords reflected groundbreaking concessions by both sides that would help ensure that China abided by past commitments to provide a level playing field for U.S. companies doing business within its borders.

Leaders in Hollywood’s movie and music industries praised the agreements, which include a pledge by China to crack down on counterfeiters and curb trade in pirated materials. Piracy of American entertainment and other products is rampant in the Asian nation, robbing U.S. firms of billions of dollars in revenue, according to estimates.

The anti-piracy accord is “a real victory for composers, record companies, artists and other copyright owners in China,” said Mitch Bainwol, chairman of the Recording Industry Assn. of America. But he and others stressed that it remained to be seen whether China would live up to the agreements.

The deals were finalized in daylong discussions between a Chinese delegation headed by Vice Premier Wu Yi and a U.S. team of Commerce Secretary Don Evans, U.S. Trade Representative Robert B. Zoellick and Agriculture Secretary Ann M. Veneman.

“We are willing to do our utmost to seek balanced trade,” said Wu, a former trade minister and the only woman in China’s ruling Politburo.

The agreements addressed several specific disputes that have exacerbated tensions between the two governments and have made U.S.-China trade a hot-button issue. They didn’t deal with others, such as China’s currency policies, labor practices and taxation of U.S. semiconductor imports.

Although U.S. exports to China have risen rapidly, China’s exports to the United States have accelerated even more, creating a $124-billion trade deficit last year. Some critics have accused the administration of failing to target practices that they say have contributed to the loss of 2.8 million manufacturing jobs since President Bush took office.

“Given the looming election, they had an extra incentive to try to show what they were doing on this front,” said Nicholas Lardy, senior fellow at the Institute for International Economics in Washington. “I would characterize it as very, very incremental. The key issues -- currency and semiconductors -- are not being addressed.”

The administration has taken several steps in recent months to demonstrate its determination to make China play by the rules, such as filing a case at the World Trade Organization challenging China’s use of tax breaks to benefit its semiconductor industry.

President Bush told a meeting of newspaper publishers Wednesday that the administration would continue to press China and other countries to open up their markets, rather than erect protectionist barriers at home.

Trade experts said the most significant agreements struck Wednesday involved promises by the Chinese to protect intellectual property rights and improve access to its domestic markets.

Chinese officials promised to take several steps to crack down on what they acknowledged has been widespread counterfeiting and piracy of American CDs, DVDs, computer software and other intellectual property.

They said they would increase criminal penalties for a wide range of intellectual property rights violations by the end of this year, including the import, export, storage and distribution of counterfeit products. They agreed to apply criminal sanctions to online piracy, expand customs enforcement and order government agencies to stop using pirated software.

The chairman of the Motion Picture Assn. of America, Jack Valenti, hailed the agreement as containing important copyright protections for film studios, adding that he expected the pact to significantly reduce piracy.

Nonetheless, Valenti said, China also needs to take the additional step of easing its market barriers restricting Hollywood. “China’s enormous entertainment needs must be provided through legal channels, not by pirates,” he said.

China agreed to indefinitely delay plans to require that wireless communications devices sold inside its borders incorporate a Chinese encryption technology. The standard, which would make it more difficult for U.S. firms such as Intel Corp. to sell products in China, was scheduled to take effect June 1.

The Chinese team also promised to pursue a policy of “technology neutrality” in the mobile phone market by letting its domestic telecommunications providers decide for themselves which type of third-generation standards to adopt.

U.S. officials made several concessions as well -- promising, for example, to take steps that could lead to more exports of “dual-use” technology currently restricted on national security grounds.

Hamilton Loeb, who heads the international trade practice at Paul Hastings, a Washington law firm, said the U.S. team pursued a carefully crafted negotiating strategy designed to maximize the appearance of success.

“This is kind of like a marital spat in which one spouse agrees to reform on each and every item on a long list of grievances,” he said. “We’ll see in a week how much of it sticks.”

Times staff writers James Bates and Jeff Leeds in Los Angeles contributed to this report.