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Some 70% of Chinese government agencies use pirated software, says IT industry

WASHINGTON, DC - 04/04/06 - US trade officials have identified several trade barriers in China to US-sourced exports, but have declined to say whether any of them are likely to lead to challenges at the World Trade Organization (WTO).

The Office of the US Trade Representative (USTR) recently released its 2006 report of unfair trade barriers in foreign countries - the National Trade Estimate on Foreign Trade Barriers (NTE) - with 71 of its 712 pages covering US trade relations with China.

The NTE report identifies trade barriers in 63 countries and trade blocs, with Cambodia and Laos newly added. After China, the longest barriers lists appear in the chapters on the European Union (EU), Japan, and South Korea. 

In a teleconference with reporters, USTR officials, who asked not to be identified, said that most of the problems listed in the 2006 report are the same ones that have appeared in earlier reports. They did, however, recognize the resolution last year of a few long-standing issues, such as the dismantling of Japan's former barrier to US-grown apples. 

Late last week, after the USTR announced that the US and the EU were challenging China's barriers to auto-parts imports at the WTO, US Trade Representative Rob Portman told reporters that more WTO cases against China might be coming.

In the March 31 teleconference, USTR officials would not identify which of China's practices are most likely to face WTO challenges from the US, but did specify the country's continued ban on US beef imports as a crucial problem.

They grouped other major barriers in China they into "categories of practices," including product piracy, weak intellectual property protection (IPR), unfair government subsidies to industries, and other industrial policies that act to promote Chinese content over imports in manufacturing and services.

The officials said that even though Beijing has made "incremental progress" in protecting IPR, vast problems remain.  By US industry estimates, for example, even 70% of Chinese government agencies continue using pirated software.

"We would like to see them move faster," one official said.

Russia was another country identified as lacking adequate enforcement of IPR.  Russia aims to complete soon bilateral and multilateral negotiations on accession to the WTO, and IPR protection remains one of the unresolved issues.

By the end of this month, the USTR must identify, under a provision of US trade law called Special 301, which countries deserve greater scrutiny over IPR. Unresolved Special 301 issues ultimately can result in retaliatory sanctions.

The USTR can challenge many of China's practices at the WTO, but not all. 

China is not party to the WTO agreement on government procurement, for example.  One official said the US is pressing China to join that agreement, describing the vast potential market for imports.

China's central government "has been reluctant to make that commitment yet, however, citing a need to seek cooperation from its own agencies as well as a staggering number of provincial and local government agencies," the official said.

"They just say they need more time," he added.

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