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U.S. May Slap China Today With Sanctions Over Pirating : Trade: Chinese threaten retaliation but time remains for a settlement before the U.S. would actually collect fines.

February 04, 1995|JIM MANN | TIMES STAFF WRITER

WASHINGTON — The Clinton Administration is prepared to announce today the imposition of trade sanctions worth hundreds of millions of dollars against Chinese goods if China does not agree to stop pirating American software, compact disks, films and other copyrighted material.

"We expect that we'll have an announcement tomorrow morning . . ," U.S. Trade Representative Mickey Kantor said Friday. "We're not going to hesitate . . . if there's no agreement."

Trade negotiations between the United States and China broke off last week and there were no signs late Friday of any last-minute talks. "If we do take action . . . it will be the largest sanctions in retaliation in American history," Kantor added in a CNN interview.

The Chinese regime has suggested that if the United States imposes sanctions on its goods, it will respond with its own higher tariffs on American products being sold in China, including automobiles, cigarettes, videotapes and alcohol. Thus, the threatened sanctions raise the specter of an escalating trade war between the United States and China.

However, even if sanctions are announced today, they may turn out to be merely a way-station on the route to further trade talks. Several experts cautioned that Chinese and American officials still could reach a settlement over the next few weeks before the penalties actually take effect.

There probably will be a grace period before tariffs are imposed--thus allowing time for goods now in transit to clear customs and, of course, giving time for Beijing to come up with a deal.

In late December, the Administration set the deadline of today for trade sanctions if there is no agreement to protect American copyrights, patents and trademarks. Administration officials and industry representatives contend that China is the world's principal violator of intellectual property rights.

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"We'd like to see an agreement. But this is up to the Chinese," Kantor said."They know what we need. They know what is appropriate. They know what they need to do . . . to be consistent with international norms. And it's time they reacted correctly."

Over the last two years, American officials repeatedly have complained to the Beijing government about the operations of at least 29 factories in Southern China that produce pirated versions of American products, including 75 million compact discs. U.S. officials say the factories cost American companies at least $800 million a year in lost revenue.

However, China, which in 1992 formally signed the international convention protecting patents and copyrights, so far has been unwilling or unable to close down the factories.

America's trade deficit with China has been growing rapidly over the last five years and is now about $30 billion a year--far larger than with any other nation in the world except for Japan.

In another sign of the economic friction between Washington and Beijing, Clinton Administration officials are now said to be preparing to nominate former Tennessee Sen. Jim Sasser to be U.S. ambassador in Beijing. While in the Senate, he had been one of the leading advocates of tough trade and economic policies, particularly toward Japan.

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Special correspondent Maggie Farley in Hong Kong contributed to this story.

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