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WTO ruling on China is partial U.S. victory

July 23, 2009|Associated Press

GENEVA — The U.S. has largely prevailed in a trade dispute with China over restrictions on the sale there of U.S. CDs, DVDs, books and computer software, two officials familiar with the ruling said.

The confidential verdict from the World Trade Organization comes as President Obama's administration is being pressed to be tough over trade rules with China, which many Democrats in Congress blame in part for soaring trade deficits and lost manufacturing jobs in the U.S.

The ruling in the case, filed before Obama took office, was released to Beijing and Washington last month but won't be made public until Aug. 12. It finds that Beijing is breaking commerce rules by forcing U.S.-made goods including magazines and video games to be sold through Chinese state-owned companies, the officials said.

But, as with most WTO rulings, the officials say the ruling stops short of a complete U.S. victory as the three-member panel delivered mixed findings on Chinese censorship rules that apply to U.S.-made goods, but not to Chinese products. It also permits China to make U.S. films go through one of two designated distributors to be shown in Chinese cinemas, a mandate not required of Chinese movies.

The officials who had reviewed the ruling spoke on condition of anonymity because of confidentiality rules ahead of publication.

The Office of the U.S. Trade Representative and the Chinese Commerce Ministry have declined to comment.

The ruling will also be of interest to a variety of U.S. media producers from Hollywood to Silicon Valley, who contend that discriminatory Chinese rules are costing U.S. media companies millions of dollars.

The dispute includes a complaint about Chinese censorship of recorded-music downloads in China, such as those sold by Apple Inc.'s iTunes store.

The U.S. case has been strongly supported by trade associations representing the major studios including Warner Bros., Disney, Paramount, Universal and 20th Century Fox; publishers such as McGraw Hill Cos. and Simon & Schuster Inc.; and record companies including EMI and Sony BMG.

The WTO can authorize retaliatory sanctions against countries unwilling to bring tariffs, subsidies and other trade practices in line with international agreements, but generally only after years of litigation. Washington and Beijing can appeal the verdict.

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