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. Last Updated: 07/27/2016

Piracy Move on China Seen as Near

WASHINGTON -- After months of prodding China to crack down on pirated copies of U.S. movies, music and software, the White House appears ready to escalate the dispute into a legal confrontation.

In recent weeks, U.S. administration officials have strongly hinted that they are close to filing a formal trade complaint against China at the World Trade Organization, saying China has failed to prosecute all but a small fraction of the ubiquitous and visible street trade in bootlegged American entertainment.

"The United States has made it clear that formal WTO consultations will be necessary without concrete actions by China in this area," the office of the United States trade representative warned last week in its annual trade report to Congress.

The administration went on to complain about "inadequate" enforcement of intellectual property rights -- copyrights, patents and trademarks -- in movies, music, books, pharmaceuticals, software and many other areas.

The China Copyright Alliance, an industry coalition that includes Hollywood studios, independent movie and television producers and the recording industry, has been pushing the administration for months to file a formal legal complaint. Administration officials have made it clear they are preparing to do so.

"We're all going to run out of patience at some point, and that's going to be sooner rather than later," said Susan Schwab, the United States trade representative, in a speech on Feb. 22.

Bloomberg, citing industry executives who said they had been briefed by the administration, said Schwab was likely to file two complaints against China as early as this week.

Sean Spicer, a spokesman for the trade representative, refused to comment on administration plans. But industry executives have been expecting a formal complaint.

"It's a sign of growing impatience, including within the business community," said William Reinsch, president of the National Council on Foreign Trade.

Industry executives said they had been waiting for the administration of U.S. President George W. Bush to file two separate complaints. One addresses what U.S. companies say is China's reluctance to use criminal laws for people caught selling DVDs with pirated material on them. A second complaint would be about expanding "market access" for U.S. products in China.

If the United States files the twin actions, it would be the third time this year that the Bush administration has sought to pressure China for its trade practices, signaling a tougher policy after taking a largely conciliatory approach for six years. On March 30, the United States announced it would reverse more than 20 years of practice and impose potentially steep tariffs on Chinese manufactured goods on the ground that China is illegally subsidizing some of its exports.

In February, the administration leveled a complaint with the world trade group that China subsidizes a number of industries in violation of trade rules.

Chinese authorities have made moves in recent days to head off a legal confrontation. On March 26, China's National Anti-Piracy and Pornography Office announced that it had raided a storage facility in Guangzhou, after receiving information from the Motion Picture Association, and seized what it said were about 1.6 million pirated copies of movies and television shows.

Last week, the Chinese Embassy in Washington announced that China's Supreme Court had issued a "new judicial interpretation" that would lower the threshold under which prosecutors are allowed to charge people under criminal laws against piracy. Until last week, prosecutors could impose administrative penalties only on people caught with fewer than 1,000 illegal DVDs. Now the threshold will be just 500 DVDs.