The United States has asked the World Trade Organization (WTO) [official website] to establish a "dispute settlement panel" [press release] in its case against China for alleged lax enforcement of copyright and trademark violations [JURIST report; WTO backgrounder], the Office of the US Trade Representative [official website] announced Monday. The request came after the US and China failed to resolve their differences through bilateral consultations [WTO backgrounder] and will be considered by the WTO Dispute Settlement Body [WTO backgrounder] during its next session on August 31.
The case, filed in April, was denounced by Chinese officials [JURIST report] who warned that it would "seriously undermine the cooperative relations the two nations had established in the field." The US also has another case against China [WTO backgrounder] pending, which accuses the Chinese government of adopting "measures that restrict trading rights with respect to important films for theatrical release," audiovisual home entertainment products, and publications. In February, US Trade Representative Susan Schwab [official profile] announced a case [WTO backgrounder] against China for its practice of subsidizing enterprises that "purchase domestic over imported goods or [meet] certain export performance criteria."
The United States on Monday asked the World Trade Organization to mediate a copyright trade dispute with China, saying bilateral talks have failed to close loopholes that allow counterfeiters to flourish.
It marked the third time in less than a year that the United States has sought a WTO dispute settlement panel to help resolve trade frictions with the leading emerging superpower, whose ballooning trade surplus has become a political flashpoint.
Washington filed a complaint with the WTO against China in April, alleging China's legal regime for protecting and enforcing copyright and trademark protections was unfairly deficient.
Chinese-made counterfeit goods -- from software and DVDs to luxury leather goods and watches -- are widely available in the US market.
Bilateral talks held in early June within the framework of the WTO dispute process proved fruitless, the office of the US Trade Representative said.
"The United States and China have tried, through formal consultations over the last three months, to resolve differences arising from US concerns about inadequate protection of intellectual property rights in China," USTR spokesman Sean Spicer said in a statement.
"That dialogue has not generated solutions to the issues we have raised, so we are asking the WTO to form a panel to settle this dispute."
The US request will be considered by the WTO Dispute Settlement Body at its next meeting, scheduled on August 31, the USTR said.
"In pursuing this action, the United States is seeking to eliminate significant structural deficiencies that give pirates and counterfeiters in China a safe harbor to avoid criminal liability," the trade office said.
Spicer said that China had taken "tangible steps" in recent years to protect intellectual property, but "we still see important gaps that need to be addressed."
There was no immediate official reaction from the Chinese government.
The United States, joined by Canada and the European Union, requested a WTO panel in September 2006 to help settle a dispute over automobile parts. The complainants accuse China of imposing charges that unfairly discriminate against imported auto parts.
In July, the United States, joined by Mexico, asked for a panel to mediate a dispute over allegedly illicit Chinese subsidies.
In the documents lodged with the WTO, the two countries target tax breaks they claim China offers to companies if they buy Chinese supplies instead of imported goods or that appear to be based on a firm's export performance.
Both cases are still under way.
When bilateral consultations fail, the WTO in principle has six months to resolve the dispute. Usually the trade body sides in favor of the party bringing the complaint, but the loser has the right to appeal and the dispute can drag on for years.
The gaping and growing US trade deficit with China -- which hit 232.5 billion dollars last year, according to official US figures -- has triggered a backlash in the United States.
US lawmakers are pushing for legislation to allow for sanctions against Beijing over what is seen as its manipulation of the yuan exchange rate to gain an unfair trade advantage.
Critics of China in the United States say the yuan currency is undervalued by as much as 40 percent, making Chinese exports cheaper.
China revalued its currency in July 2005 and Beijing has since repeatedly said it will allow the yuan to strengthen as part of overall reforms to a financial system it says would risk full collapse with a full flotation.