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China Must Be Ready to Play the WTO Game
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China had legitimate grounds for complaint when the US Trade Representative filed two intellectual property right (IPR) cases against China in the World Trade Organization.


The cases were taken to the WTO while the Chinese authorities were dealing with the issue of IPR protection. Enforcement of laws has been strengthened to protect the interests of IPR holders. But that didn't impress the US.


Welcome to the world of international litigation. China has to realize that these cases herald a new phase in the country's participation in the multilateral trading system six years into joining the WTO.


As China increases its impact on the world economy, countries affected by Chinese competition will tend to resort to the WTO dispute settlement mechanism.


China should not have illusions about the effectiveness of quiet diplomacy in resolving disputes over fundamental trade interests unless the country can afford to make endless unilateral concessions. Otherwise, it will have to keep defending its trade interests with the legitimate right accorded to it by the WTO.


From now on, China must stand ready to play the WTO game.


US officials characterized the situation as reflecting the maturity of US-China trade relations. This is probably true. China's strong protest can reach a very limited audience in the United States and will have little impact on the US Congress.


A WTO ruling provides more effective protection of legitimate interests of WTO members.


It is advisable for China to act in a way that will avert the recurrence of political meddling in China-US economic and trade relations as occurred before China joined the WTO. China's joining the WTO makes no sense if the country shies away from using WTO rules to defend its legitimate interests.


Settling a dispute in the WTO on a specific subject would probably help the US administration siphon off Congressional pressure to pass comprehensive protectionist legislation against China. The dispute settlement procedure provides flexibility to reach an amicable solution.


If China wins the case, there is no need to make any concessions. If China is found in breach of WTO obligations, it should face the fact and take action to rectify it. That is something a responsible WTO member is obliged to do. If China has met her obligations, no sanctions against her are justified.


The two IPR cases filed by the United States have very weak arguments. The accusation of China's failure to enforce IPR protection law is unjustifiable.


In some cases China has gone to great lengths to accommodate the interests of foreign IPR holders. For example, the government endorsed anti-competitive practices by requiring pre-loading of software in imported computer hardware. This product tie-in will run into conflict with the competition law now in the offing.


China has met its obligations when legal remedies are available. The Chinese authorities are making continuous efforts to take strong administrative measures against piracy. But severe criminal prosecution cannot completely eliminate piracy, just as in the case of drug trafficking.


The case of market access for DVDs, CDs and publications is a non-case. The US increased pressure on China over the IPR issue in an attempt to secure concessions in audio-visual market access. But market access is a subject for negotiations on a reciprocal basis.


There is no relation between market access and IPR piracy. When the US has not had legal access to the Chinese market, there is no question of economic loss.


The message of WTO membership is clear: China should not hesitate to resort to WTO mechanisms for settling trade disputes. More frequent use of the WTO dispute settlement mechanism is inevitable. Now that China is the world's third largest trading country, it cannot avoid conflicts in trade interests with other WTO members.


China is entitled to use the dispute settlement mechanism to defend its legitimate interests. Seeking to resolve a trade dispute in a multilateral forum is in full compliance with China's policy of building a harmonious world.


The author, China's former senior WTO negotiator, works with EU-China Trade Project


(China Daily April 18, 2007)


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