Tian Lipu, commissioner of the State Intellectual Property Office of China. [sipo.gov.cn]

"China expressed great regret and strong dissatisfaction at the decision of the United States to file WTO cases against China over intellectual property rights and access to the Chinese publication market," a spokesman for the Commerce Ministry said in Beijing Tuesday.
 
Wang Xinpei, the spokesman, said the US move runs against the consensus reached by leaders of the two countries on developing bilateral trade relations and appropriately handling trade problems.

"Such a move would seriously damage the cooperative relations established in the fields, and would have negative impact on bilateral trade," Wang said in a statement posted on the ministry's website (www.mofcom.gov.cn ).

The Chinese government's attitude towards intellectual property rights protection has always been resolute, and its achievements obvious to all, the statement said.

China so far has not received any request from the US for consultation under the WTO mechanism. Wang said China will seriously study it and make positive response once the US raises an official request.

Under WTO rules, if the parties to a trade dispute fail to iron out their differences within a 60-day consultation period, the complaining party may refer the matter to a WTO dispute settlement panel.

"It's not a sensible nor a rational move for the US government to file such a complaint," Tian Lipu, commissioner of the State Intellectual Property Office of China, said.

"By doing so, the United States has ignored the Chinese government's immense efforts and great achievements in strengthening IPR protection and tightening enforcement of its copyright laws," Tian said.

Tian reiterated the US move would not affect Chinese government's firm resolution in intellectual property rights protection and in its fight against piracy.

China's efforts in IPR protection is never something due to foreign pressure, but due to its own needs for development, for the construction of an innovation-oriented country.

The two new cases to be filed by the US represent the latest effort by the Bush administration to increase pressure on China in the trade area despite Beijing's active efforts in cracking down on piracy.

US Trade Representative Susan Schwab said the United States would file the two cases on Tuesday with the World Trade Organization, the Geneva-based organization that oversees trade disputes.

"China has taken numerous steps to improve its protection and enforcement of intellectual property rights (IPR), (but) we have not been able to agree on several important changes to China's legal regime that we believe are required by China's WTO commitments," she said. 

One case will contend that Beijing's reported lax enforcement of copyright and trademark protections violates WTO rules, and the other will argue that Beijing has erected WTO-illegal barriers to the sale of US-produced movies, music and books in China.

The action marked the latest move against China on the part of the Bush administration, which is trying to deal with rising political anger over soaring US trade deficits.

The trade cases exposed a split in the business community: The film, music and book publishing industries supported the move while some other industries were concerned over whether the aggressive approach to China could result in retribution.

In her news conference, Schwab acknowledged that different industries favor different approaches. She noted that the software industry scored a big victory last year when China agreed to sell all computers with operating software.

"Where we are making progress, there is no need to litigate," Schwab said.

The US claimed that its trade deficit setting a record for the fifth consecutive year in 2006 at $765.3 billion (euro572.27 billion). The imbalance with China grew to $232.5 billion (euro173.86 billion) the highest ever with a single country.

Democrats, who won control of both the House and Senate last fall with campaigns that attacked President George W. Bush's trade policies, said Monday that tougher action was still needed.

Democratic Sen. Sherrod Brown, called the timing of the new cases "certainly suspicious" given that they come when the administration is asking Congress to renew Bush's fast-track authority, which allows him to negotiate trade deals for expedited consideration by Congress.

Gary Hufbauer, a trade expert at the Peterson Institute, a Washington think tank, said that the new get-tough approach is an effort by the administration to regain control of the trade debate now that Democrats are in control of Congress.

The decision to go to the WTO with the two new trade cases will trigger a 60-day consultation period during which trade negotiators from both countries will try to resolve the two disputes.

If that fails, WTO hearing panels would be convened. If the US wins the cases, it would be allowed to impose penalty economic sanctions on Chinese products.

In a statement, the Motion Picture Association of America and the Recording Industry Association of America both applauded the administration's action.

In late March, the US government announced its decision to impose penalty tariffs against the imports of Chinese coated free sheet paper, a decision altering a 23-year old bipartisan policy of not applying the countervailing duty (CVD) law to China.

The Chinese government responded strongly in a statement of the Department of Commerce, saying such an decision "goes against the consensus reached between leaders of the two countries to resolve contradictions through dialogues."

"China strongly requires the US side to reconsider the decision and make prompt changes," the statement said.