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Limiting imports: WTO rules against China

By Lalit K Jha
Last updated on: December 22, 2009 14:17 IST
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WTO logoThe United States has won a case against China at the World Trade Organisation which has ruled that it is illegally restricting imports of movies, music and books into the country.

The WTO Appellate Body on Monday held that China was obstructing trade by forcing foreign suppliers to distribute certain copyright-intensive products through state-owned companies which is inconsistent with the Beijings obligations with the WTO.

"Today America got a big win. . .The Appellate Body's findings are key to ensuring full market access in China for legitimate, high-quality entertainment products and the exporters and distributors of those products," Ron Kirk, the US Trade Representative, said.

US companies and workers are at the cutting edge of these industries, and they deserve a full chance to compete under agreed WTO rules, he said.

"We expect China to respond promptly to these findings and bring its measures into compliance," Kirk added. Mondays Appellate Body report and the WTO panel report, released on August 12, call on China to allow US companies to import into China films for theatrical release; audiovisual entertainment products, such as DVDs; music and other sound recordings; and reading materials.

In fact, Western countries have been complaining against the restrictions for long, which say that China's rapid rise as a trade power has been in part aided by unfair policies that boost sales of Chinese goods abroad while limiting imports into its market.

US movie, music and publishing companies say the Chinese rules cost them millions of dollars each year in lost business opportunities.

The restrictions on selling directly to the public are a key reason why there is no iTunes store in China, despite demand as evident in the popularity of Apple Inc. iPods and iPhones, these firms say.

The WTO case focused on complaints by groups representing music labels such as EMI and Sony Music Entertainment, publishers, including McGraw Hill and Simon & Schuster, and Hollywood studios Warner Bros., Disney, Paramount, Universal and 20th Century Fox.

The WTO said China cannot limit distribution of U.S. goods to Chinese state-owned companies.

It said China's restrictions were not necessary to protect public morals. China has contended that its restrictions on importation of these products are justified by an exception related to the protection of public morals.

The US had dragged China to the WTO in April 2007, alleging that it prohibits foreign enterprises and individuals from importing reading materials, audiovisual home entertainment products such as DVDs, music and other sound recordings, and films for theatrical release.

"This case is also an important part of our efforts to combat intellectual property piracy," Kirk said. If China fails over the next year to bring its practices in line with international trade law, the U.S. can ask the WTO to authorise commercial sanctions against Chinese goods.

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Lalit K Jha in Washington
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