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. Last Updated: 07/27/2016

U.S., China Avert Trade War, Sign Piracy Deal

BEIJING -- China and the United States averted a trade war by reaching an accord that cracks down on Chinese copyright pirates and opens the world's most populous country to Hollywood and the U.S. recording industry.

The deal, signed after cliffhanger talks stretching beyond expiration of a deadline, nullified more than $2 billion worth of tit-for-tat sanctions over intellectual property piracy that would have automatically taken force Sunday.

U.S. President Bill Clinton described it as a strong agreement that would help U.S. companies and workers while promoting broader goals in China.

"Greater respect for rule of law and greater access to intellectual property products both promote a more open Chinese society," he said in a written statement in Washington.

China's minister for foreign trade and economic cooperation, Wu Yi, said Sunday's accord marked the start of a new era in often fractious Sino-U.S. ties. "This agreement is a new turning point for our bilateral relationship," Wu said.

The top U.S. negotiator, Deputy Trade Representative Charlene Barshefsky, hailed the pact as historic, saying it would not only curb theft of U.S. films, music and software but could also unleash a flood of U.S. investment in China.

U.S. industry had said millions of dollars could pour into China if the punitive trade sanctions were averted.

Under the eight-point accord, China abolishes import quotas and many other barriers for U.S. intellectual property, particularly recorded music and film, effective immediately.

"This is the single most comprehensive and detailed agreement that the United States has ever negotiated with any country," Barshefsky told a news conference. "At last legitimate U.S. products will be able to replace pirated goods."

U.S. officials indicated the breakthrough was China's concession, hours before the sanctions deadline, to close a plant in the southern boom town of Shenzhen that was flooding Asia with millions of pirate compact discs.

The plant, owned in part by the local government, was visited in 1992 by China's leader, Deng Xiaoping.

Washington says piracy of U.S. patents, copyrights and trademarks in China costs U.S. industry nearly $1 billion a year. China has closed seven pirate compact disc factories and confiscated 2 million fake CDs and software in recent weeks.

The pact guarantees dramatic action by China, including allowing audio-visual joint ventures on a revenue-sharing basis, thus giving U.S. filmmakers a share of box office receipts for the first time, Barshefsky said.

China will also create nationwide task forces to combat intellectual property pirates and launch raids in a six-month enforcement period from March 1 to destroy counterfeit products.

"It is a win-win agreement, no question about it," Barshefsky said.

Despite the agreement, new moves by China indicate that turbulence will persist in its relations with the United States.

Beijing launched a diplomatic counter-offensive against what it regards as Washington's unfair criticisms on human rights, denouncing U.S. allegations that China holds prisoners of conscience in a Cabinet statement. It also attacked what it called human rights abuses in the United States.